LONDON (AP) -- After a tough year, the UK car market recorded a buoyant end to 2009, with many motorists taking advantage of the vehicle scrappage scheme and the reduced VAT (value added tax) rate to pick up some good deals. However, with the scheme scheduled to end in February and VAT having been put back to the original 17.5 percent rate, analysts are predicting tough times ahead for the motor trade.
New car registrations in December were up by 38.9 percent from the previous year's figures to 150,936 cars. Despite this, total sales for the year were down 6.4 percent to 1,994,999 units, the lowest level since 1995. Small cars proved to be the most popular, with the Ford Fiesta being December's top seller. Meanwhile, budget manufacturers such as Hyundai and Kia increased their market share, demonstrating the demand for affordable motoring.
Despite a positive end to 2009, experts are predicting that sales in 2010 could fall to as low as 1.7 million units, as the economy continues to struggle. This will not be helped by the end of the scrappage scheme and VAT hike, which will deter many motorists from replacing the vehicles. With a general election due in May, however, the political landscape could change and may see the re-introduction of scrappage allowances.
In the meantime, dealers will have to work hard to attract sales, as a spokesperson for motor trade insurance specialists Staveley Head explains:
"With the end of the vehicle scrappage scheme and VAT returned to its usual rate, those in the motor trade are going to have to work hard to encourage sales throughout 2010. This will include offering heavy discounts and attractive finance packages, in order to encourage more people to buy."