This week seems to have seen a mixed bag from certain dealers, with the confusion around the administration of the scrappage scheme continuing to cause distress. Many sales people are now starting to shy away from talking to customers about scrappage as they are not sure whether they can actually commit to the deal. Worse still they may be unsure that a car which may need to be factory ordered will actually arrive in time to qualify for the scheme. A lot of potential customers are contacting dealers and asking for the scrappage discount plus an extra big discount on top, which again is causing some dealers to declare the scheme a waste of time. Howeversome have told us that many buyers, who have clearly been unused to changing a vehicle in the last few years, are happy to receive £2,000 off their new car, leaving dealers making virtually their full margins something they have not been used to doing for many years on new cars.
The only downside is that so far according to our research 80% of cars ordered on scrappage fall into the small sector where profitability is at its lowest. From an environmental point of view almost unwittingly the scheme has managed to rid the planet of plenty of so called ‘dirty cars’ and replaced them with small economical, environmentally friendly cars.
We wonder how long it will take before we hear some government spokesman claiming credit for this even though it has happened almost by accident.
The situation involving used cars is that with supply at a new low and as the price gap closes, buyers may be seriously tempted by brand new. We have now know that UK car production in April was down 55% year-on-year, so clearly car makers will be looking at ways of selling more cars, over and above the scrappage scheme, as we finally begin to pull out of the downturn.
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