With VAT going up in January, December was much lauded as a time full of car sales for the autmotive industry. However, in actually fact sales figures fell in December when compare to 2009, and that nice peak never actually appeared.

There are a number of reasons for this poor showing. After all, the snow kept many people stuck at home for week upon week, and unless you are shelling out on a seasonally suitable 4×4, you are most likely to delay any purhcases you might have been intending to make. Then comes Christmas, and the New Year, and before you know it you are in 2011, and the VAT has risen to 20%.

The thing is, how muhc damage has this poor month done to the car industry? It is easy to see it as a minor dip, one that will be recovered from. However, it is badly timed, as the VAT increase is bound to put some people off buying a new car. This may temporarily boost the used car market, but what will be the long term effect if this trend continues?

Hopefully it won’t – as expressed by the cautiously optimistic Chief Exec of SMMT, who said “Economic conditions remain extremely challenging but the industry expects demand to strengthen in the second half of the year.” Let’s hope he’s right!

[Image: source]