In reaction to a 6.1 per cent slump in sales figures for June
2008 compared to the same month last year, Sue Robinson, director
of the RMI National Franchised Dealers Association (NFDA) stated
that government clarification on Vehicle Excise Duty (VED) changes
for the coming year could significantly boost consumer
confidence.
“Uncertainty over the rising cost of motoring, along with higher
overall living costs, have made consumers more cautious about
buying a new car,” said Robinson, putting June’s sales total of
209,190 down to customers’ difficulty in predicting tax
implications as a factor alongside rising fuel costs, economic and
environmental concerns in deciding whether to buy cars.
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“Many consumers will wait to see how the cost of motoring and
the overall economy plays out over the next few months,” she added,
going on to suggest that attempts to stabilise the cost of fuel
could work alongside VED clarification to contribute to a sales
recovery.
Robinson pointed out that, if the proposed VED changes are
passed unmodified, only 33 per cent of cars will be taxed at a
lower rate following the abolition of the existing VED exemption on
higher road tax rates for vehicles emitting more than 225g of
CO2/km, registered between March 2001 and March 2006, while 44 per
cent will require owners to pay a higher VED rate. “Previously the
Treasury stated that many owners will be better off under the new
rules. These figures show that this is not the case,” she said.
Interest rate hold ‘not enough’
Meanwhile, Robinson criticised the Bank of England’s decision to
keep interest rates unchanged. “Holding interest rates at five per
cent is not enough; the economy needs a rate-cut kick-start to
re-energize consumer spending.
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By GlobalData“Current economic uncertainty is making consumers cautious about
making major purchases, such as a new car. By not trying to combat
such hesitance, the Bank of England is in danger of making the
situation worse,” Robinson said.
Fred Crawley and Jo Tacon
Motor Finance Issue: 45 – July 08
Published for the web: July 25 08 16:1
Last Updated: July 25 08 16:1
