The UK car market is forecast to decline by 11% in 2010 according to the SMMT.
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The UK car market in 2009 reached almost 2m units and was boosted by a scrappage incentive which helped to kick-start the market.
Speaking at an online webinar, SMMT chief economist Robert Baker said that without the scrappage incentive the UK car market would have gone as low as 1.6m/1.7m units in 2009.
The forecast for 2010 is for the market to drop 11% to 1.777m units before rising to 1.859m units in 2011.
“The UK economy is still adjusting to the economic situation,” he said.
Baker pointed out that low interest rates, unexpectedly low unemployment and stable asset prices were all positives on the general economy. However, he maintained that there would be some post-scrappage ‘payback’ in 2010 and that some buyers would be holding off ahead of a general election and some uncertainty on interest rates.
He also pointed to medium-term concerns over the economy.
“The volume of GDP won’t be getting back to where it was before the crisis until late 2012,” he said.
“And at some point there is a further adjustment ahead for governments – like the UK’s – with large fiscal deficits. That could further squeeze incomes. There is pick-up to economic growth ahead, but there is a degree of uncertainty ahead about the strength of the recovery and how it will play out.”
However, Baker did hold out the hope that the market will recover to pre-crisis levels eventually, though not as far as the peak of 2.7m – recorded in 2002.
“There are concerns and some uncertainties about the economic adjustment taking place and the timescale,” he said. “But there is no reason, provided the economic conditions are right – that financing comes back, that replacement cycles shorten, that the product is good and regulators aren’t restrictive – that the market can’t return to the 2.3m/2.4m unit level.”
