VAT Increase Pushes up Used Car Prices

An increasing number of UK motor manufacturers have increased their used car list prices this month following the rise in VAT to 20 per cent. Research by car pricing data provider CAP revealed that as many as two-thirds of all car manufacturers increased their basic list prices by a higher amount than would otherwise be accounted for by the increased VAT rate.

Mike Hind of CAP said: “The New Year will be a good time to trade in a high quality used car. Our research shows that dealers are currently paying very strong prices to keep their stock levels up and that is unlikely to change any time soon.”

Interestingly the actual increase of used car list prices was recorded at £142.74 – almost double the average price increase of UK vehicles based solely on the VAT increase at £79.57.

David Saville, CAP’s new vehicle data manager, said: “Historically, tax-driven changes to car manufacturer price lists have often been used as an opportunity by manufacturers to realign their ranges and push through additional price increases.”

The high demand for quality used cars appears to be another factor in the increase of used car prices. In fact many “serious buyers” are already purchasing vast amounts of stock to ensure they do not run out over the course of the year.

“Buyers spent December attempting to stock up and this was not only driven by the desire to beat an anticipated January rise in values. Research during December consistently revealed a genuine appetite for stock, underpinned by a positive level of confidence, to ensure dealers were in a position to get the year off to a good start.

“There is also a widespread acceptance that buying will need to continue in January and that they will need to pay ‘all the money’ for the best stock because it is so thin on the ground and everyone will be pursuing it,” says Mark Bulmer, CAP’s Black Book research editor.

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New Car Sales in UK Rose in 2010 Despite End of Government Scrappage Scheme

Sales of UK cars rose 1.8% despite the Government ending the scrappage scheme in March 2010. The 2010 market rose by 35,847 units to 2,030,846 units, ending 1.8% up on 2009 figures.

The Government Scrappage Scheme was set up in early 2009 and was designed to boost sales in the recession, providing motorists with a £2,000 discount on new vehicles bought when they trade in cars that are over 10 years old. In 2010 alone, over 100 000 cars were registered through the scheme representing around 5% of the total market.

Volume of sales in the first half of 2010 rose by 19.9%, however fell in the second half by 13.8%. This large change reflects upon the removal of the car scrappage scheme in March, with the worst hit month being October when new car sales saw its biggest fall in 17 months down 22%. In tough economic conditions, Paul Everitt, The Chief Executive of The Society of Motor Manufacturers and Traders (SMMT) stated that “2010 was a year of recovery for the motor industry”.

The early growth helped to overcome the slowdown in the second half of the year, while the forecast for the early part of 2011 is not encouraging as the market is set to fall by 5% as difficult market conditions continue. However Everitt is positive that sales will rise in 2011, “UK motor manufacturing recovered particularly well in 2010 and the outlook is for further steady growth this year.”

ASM Auto Recycling is contracted by the UK's leading insurers and vehicle manufacturers to provide a first class vehicle and salvage recovery collection service, in association with its car salvage auction service. ASM offers a full collection and salvage service for traded in vehicles throughout the Aylesbury, Thame and Oxford areas.

UK edges closer towards ELV recovery target

The recycling and recovery rate of end-of-life vehicles (ELVs) was boosted by car salvage dealers across the UK; however the nation is still off the Europe-wide target of 85 per cent.

Six member states of the EU have already surpassed the ELV recovery rate of 90 per cent in 2008 and are now aiming towards the 95 per cent target set for 2015. Indeed Liechtenstein and Austria have already surpassed the 95 per cent reuse and recovery target, highlighting the work Britain still has to do to meet these high standards.

The latest report published by the European Commission states that in 2008 the UK moved closer to their 2006 target, which required 85 per cent of all ELVs to be recovered or reused. Nevertheless, Britain has not yet managed to reach their milestone, while neighbouring countries such as Germany, the Netherlands and Sweden are well on their way.

In 2008 a total of 49,485 tonnes of material retrievable by car salvage companies was recovered for reuse, recycling and energy recovery in the UK.

Did you know that just one litre of waste oil is sufficient to contaminate one million litres of water? Over 13,000 tonnes of liquid, excluding fuel, and just less than 5,000 tonnes of batteries were also recovered.

Car dismantlers ASM Auto Recycling provide an efficient vehicle dismantling service for the safe, environmentally-friendly dismantling, cleaning and testing of all recycled parts of a vehicle. ASM has installed state-of-the-art de-pollution rigs to enable the processing of abandoned and end-of-life vehicles (ELVs) in accordance with the European ELV Directive for its car scrappage scheme.

ASM process over 15,000 vehicles for professional vehicle salvage every year, with a further 2,000 vehicles for parts dismantling.