Baker Tilly predicts rough ride for motor industry in 2010

Baker Tilly’s Outlook 2010 publication, which explores economic activity for the year ahead, warns motor traders to brace themselves for a difficult year’s trading.

Outlook 2010 – Still crystal ball gazing? points out that even though the motor industry has been one that has been hit hard by the recession, difficulties will remain throughout 2010 as the VAT rate returns to 17.5 per cent and the scrappage scheme ends.

Baker Tilly’s predictions are echoed by the Society of Motor Manufacturers and Traders who expect 2010 to be “extremely challenging” as they released December’s registration figures earlier this month.

Graham Bushby, Head of Motor for Baker Tilly Restructuring and Recovery, said: “The going is likely to get a lot tougher for the industry in the year ahead. When you realise that some dealers are seeing 60 per cent of their sales supported by the scrappage scheme, they are going to have to work out some extremely innovative ways to replace this footfall.”

The report singles out the following challenges for the motor industry over the coming year:

• End of the scrappage scheme, widely regarded as holding up the industry
• The return of 17.5% VAT of pending personal tax rises for some post-election
• The increase in consumer debt and a cautious-spending public overall
• Expected mortgage rate increases later in 2010

• However, the report also gives a glimmer of hope, pointing out that the scrappage scheme has grown market share for certain manufacturers and dealerships to build on.

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