Cut VAT to stimulate market: car buyers

The government has been urged to expand its updated budget by cutting VAT for car buyers. The government has already made this move to stimulate spending in the hospitality and tourism sectors.

According to a survey carried out by carwow, more than a third of prospective car buyers would act immediately if this measure was introduced.

CEO of carwow, James Hind, said: “After a very difficult start to 2020, anything that stimulates the market is good news for consumers and the motor industry. However, a VAT cut for car buyers would be a much-needed catalyst to getting the automotive market back on track. Now the industry needs to look at alternative means of securing sales, such as offering competitive finance deals and discounted offers.”

Meanwhile, 60 per cent of respondents to the survey said zero per cent finance would cement their intention to buy a car, while 43 per cent said they’d be persuaded by manufacturer deals.

However, carwow believes that a meaningful scrappage scheme offers better long-term benefits for the new car market.

Hind said: “Government scrappage schemes in Germany and Spain have acted as powerful incentives to inspire drivers to investigate a move to cleaner, more fuel-efficient cars, and we would like to see the UK follow their example by introducing a suitable Government support package. Ideally this would include a tiered reward system that gives the best discounts for going fully electric, but incentivises all efforts to move to newer, more fuel-efficient cars.

“This would allow more consumers to access the benefits, encouraging a greater uptake of more environmentally friendly vehicles. There is often still a green premium to pay on hybrid and electric cars, and this is our chance to tackle that pain point. Learning from the pragmatic and forward-thinking schemes that have been so successful in Spain and Germany, we have the opportunity to bring about a real gear shift in car buying behaviour in the UK.”