Thanks to the unrelenting pressure on the secretary of state for business, Peter Mandelson has finally acknowledged what we have known for some time; there is nothing inherently wrong with the UK car industry. In announcing measures worth more than £2 billion to help create some stability with jobs and to ensure the long term survival, the government has chosen to recognise the fact that the UK car industry which has a £51 billion annual turnover, adds significantly to the UK economy as a whole and is a major employer with 850,000 people working directly or indirectly in the trade (source: SMMT).
With factories cutting production and jobs at a rate of knots and new cars stockpiling at docks around the country, it is vital that this money is put to use as soon as possible. Of the 1.5 million cars produced in this country more than 75% are exported meaning the stockpiling currently going on will only heighten the need to cut back production even further. Although the picture countrywide has improved with more used car sales it is vital for the industry as a whole to re-ignite the slump in new car sales with dealers reporting more than 30% sales reduction in some places and very few success stories. The feeling is that although there will be maybe 1,500 fewer franchised dealers in the UK by 2010 more measures will be needed to stimulate interest from buyers in the shape of big discounts and more genuine 0% finance deals being offered.
Watch out for pre-March offers to crank up demand and manufacturers again going to their franchised dealers to offer incentives to get buyers into their showrooms once more. As dealers recently told us they have escaped the worst so far with buoyant activity in used car sales, which in part is seasonal but also driven by peer pressure.
It was not so long ago that buying a new car was the ultimate status symbol and owners of new cars would proudly show them off to friends and neighbours, now however those friends and neighbours are more likely to mock them for not saving a packet and buying used!