Barclays warns of 2010 car sale slump

Written by Gary

Thursday, 05 November 2009

End of scrappage scheme and increased VAT could leave motor retailers stuck.

Barclays (LON:BARC) have this morning warned that 2010 could prove to be a hard period for those UK SMEs involved in the motor retail trade.

The comments come after the Society of Motor Manufacturers and Traders’ (SMMT) showed that to date the car scrappage scheme has indeed been a success.

The latest figures show a 31.6% increase on this time last year.

"Order books will remain strong in the near future with fulfilment and deliveries stretching into the New Year, potentially boosting business for some dealers during what is a traditionally difficult trading period. The year to date registration figures, although down 12.3% are more healthy compared to early predictions, and we can expect November and December to continue this trend," says Keith Parry, Head of Motor Retail at Barclays Commercial Bank.

The extension of the scrappage scheme by an additional 100,000 units will further assist UK new car sales into the New Year

However looking past the new year things could get harder says Barclays.

"The ending of the scrappage scheme and the VAT increase at the start of the year, however, risks leaving the sector without any support at a time when consumers may be cautious over ‘big ticket’ purchases. An additional element of this risk is that purchases are brought forward into the final months of 2009 by deal conscious consumers,” says Parry.