F&I Management & Training

British Car Auctions, the UK's leading vehicle remarketing specialist, believes the Vehicle Scrappage Scheme proposed in the budget will have an effect in the retail new markets, but the extent is unclear. "The big question is how many existing private owners of ten year old cars or vans will be in the market for a genuinely new car or van," confirmed Tony Gannon, Communications Director, BCA. BCA can see some benefits for small business concerns operating older vehicles, as Gannon explained "There could be some small and medium sized businesses who might want to trade in old working vehicles, such as vans and pick-ups who will welcome this opportunity, but again the volumes are likely to be small." Gannon continued "The scheme might lead to some interesting effects in the used car market, however. There may be an adverse impact on demand for nearly new cars, as those private buyers who do qualify might switch into buying new rather than used." He added "While the scheme is in operation there will be some price distortion on nearly-new cars, which will seem expensive compared to new cars at the discounted price. At the other end of the market, there will be cars aged below ten years that will seem under-valued, because they are worth less than the £2,000 that would apply to cars aged over ten." "Ironically, we could end up with the situation where those families looking to trade-in their six or seven year old car for a new model will be staring enviously at their neighbours 12 year old car because for the duration of the scheme it is worth more!" Gannon concluded "What is almost certain is that for the duration of the scheme there will be some distortion in the natural laws of supply and demand within the used vehicle market."

DATED: 27.04.09

FEED: AW