UK motor industry heading for 'perfect storm' warns Deloitte

The UK motor industry is facing a time of great challenges as it moves into the new year, despite the recent boom in car sales which saw October’s new car registration figures rise by 31.6 per cent.David Raistrick, UK Manufacturing Leader at Deloitte said that while new car registration figures were ‘wonderful news’ for the industry and stood as proof that the scrappage scheme had met expectations in stimulating demand for new cars, that there is trouble brewing for the automotive sector in near future.“There is a ‘perfect storm’ on the horizon where the automotive sector will be affected by a combination of factors that could come into play in Q1 next year,” he warned.“Within a short period of time we will see the scrappage scheme end and the VAT rate return to 17.5 per cent. Meanwhile the Government’s proposed showroom tax of £950 per vehicle could be implemented in March and interest rates may also increase in this period. Furthermore, car manufacturers may find themselves needing to implement price rises due to the low value of sterling increasing the cost of imported cars and parts.“At a time when the industry is showing promising signs of recovery, it is important the sector does not lose sight of the challenges ahead in 2010,” he concluded.Deloitte is a supergroup of audit, tax, enterprise risk services, consulting and corporate finance services, with experts in many areas including the auto industry.

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