Will the Budget be a trick or treat?
28 October 2018
Car manufacturers want to see some help in today’s Budget after being hit by the diesel issue, Brexit, the slump in the Chinese market, green car grant cuts, WLTP and all the other headwinds which saw output from our factories drop nearly 17% last month, adding to a downward trend.
Meanwhile auto retailers are struggling from a distinct conservatism in domestic spending and from a lack of the models to sell that many buyers want to buy.
There is not much Mr. Hammond can do about external factors and a U-turn on diesel just isn’t going to happen any more than it will for hybrid/EV grants; but he can help manufacturers by giving consumers a reason to buy the products they make – and a quick way to do that is boost demand in the company car and fleet sectors.
The financial case for many corporate sector purchases isn’t as attractive as it once was. Indeed, a recent study by cap hpi said that in the past decade the list price of a sector favourite, the BMW 320d SE, has gone up by 23% but the BiK by nearly five times that, 105%.
Factor in the impact WLTP is now having on the CO2 figures on which the tax is based and you can see why so many purchase decisions are being put on ice. Indeed, it’s being said that short term rentals are growing as a temporary stopgap solution until the picture is a bit clearer and – hopefully – the climate a bit more favourable.
There is a strong case for saying Hammond should be proactive and do something to help the industry. Lost sales from delayed orders are costing the Treasury the VAT receipts and any job losses among the factories, supply chains and retailers from a sustained downturn will give economic confidence a hard knock, hardly something we need with Brexit just around the corner.
The auto industry is not just crying wolf here. It is a major source of employment, investment and tax revenue but at the moment it is struggling and not seeing much cause for optimism in the short term.
Mr Hammond begins talking at 3.30….
Auto Retail Agenda