Blog: UK car market – outlook?
Dave Leggett | 18 February 2011
The City of London is worried about inflationary pressures in the UK economy [I took this photo on Monday afternoon while in London for a meeting, gotta love the 'Gherkin' - Dave]
How is the UK car market looking? I had a chat with David Raistrick, UK Manufacturing Leader at the auditors Deloitte earlier this week. In the light of the latest expectations that interest rates could rise here later in the year due to price inflation worries, I wondered what his latest thoughts were on the market.
I half expected him to say he was moving under a projected car market of 1.8m units (I have seen 1.7m mentioned by some – 2010, incidentally, was a shade over 2m, with a scrappage boost).
Anyway, he was pretty firm on 1.8m. Public sector buying is reducing and private consumers are keeping their cars for longer, he told me. But overall, there's enough demand to keep the market at 1.8m this year. “Things would have to get significantly worse to go below 1.8m,” he said.
But there are real pressures in the market.
“The low value of sterling and the recent VAT rise have combined to put upward pressure on pricing, particularly for imported cars,” he said, maintaining that VAT increase this year is having to be passed on to the final consumer.
Some sellers in the used car market could benefit from depressed sales of the last few years.
“The very low registrations we have seen in recent years means that as the year progresses the residual value of cars will hold up well. Coupled with new car sales being limited, this will lead to a buyer’s market for those wishing to sell their three year old cars for new ones, with good deals on both new cars and part exchange prices.”