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Car Production Falls 31% Amid Scrappage Scheme


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http://business.timesonline.co.uk/tol/business/industry_sectors/industrials/article6998084.ece

The motor industry today braced itself for a tough year ahead after its trade body announced that British car production fell by 31 per cent in 2009 compared with previous year.

In 2009, 999,460 cars were produced, more than three quarters of which were exported, according to The Society of Motoring Manufacturers (SMMT). This compares with 1,446, 619 the year before.

The fall was despite a rise of 58.5 per cent in December, the biggest increase since 1976, as buyers rushed to beat the return of VAT to 17.5 per cent and take advantage of the remains of the scrappage scheme, which is due to end in February or when the funds run out.

In December, the SMMT estimated that there was about £125 million left in the scheme.

From the times.

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http://www.telegraph.co.uk/finance/newsbysector/transport/7051814/UK-car-production-soars-most-in-34-years.html

Car production in the UK soared by the most for 34 years in December, a clear signal that the economy could have emerged from recession in the final three months of 2009.

According to the Society of Motor Manufacturers and Traders, car production rose 58.5pc to 85,316 vehicles, as manufacturers benefited from the Government’s scrappage scheme and a sharp upturn in sales.

The dramatic increase, the biggest since May 1976, reflects how car makers have reduced inventories which were bulging after the onset of the financial crisis and therefore had to ramp up production to reflect demand.

For the first time in 17 months, production in the beleaguered commercial vehicle industry also rose, gaining 15.6pc to 7,271.

“The significant rise in December vehicle production is welcome news and signals some greater stability across global automotive markets,” Paul Everitt, the SMMT chief executive, said.

The gains helped to soften the huge overall downturn in car manufacturing during 2009. Last year, 999,460 cars were produced in the UK, which was 30.9pc less than 2008. The number of vans produced fell by 55.3pc.

Then this is the telegraph view!

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the scrappage scheme, which is due to end in February or when the funds run out.

In December, the SMMT estimated that there was about £125 million left in the scheme

Will it continue after February if there is any money left?

I want to buy a newer car but am determined not to buy while this car price inflating scheme is still on.

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Aussie spin boy on BBC news this morning was picked up by female newsreader and ticked off for spinning this news. He replied along the lines of "we have to try to report some good news", "do you", she asked, "yes we do" he replied.

So, it's official, BBC Breakfast News put a positive spin on the financial news.

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Will it continue after February if there is any money left?

I want to buy a newer car but am determined not to buy while this car price inflating scheme is still on.

My guess is that they'll continue until the money runs out, probably in May!

If you 'want' rather than 'need' you can perhaps wait another few months?

Edited by council dweller
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I want to buy a newer car but am determined not to buy while this car price inflating scheme is still on.

You're going to be disappointed. Car prices aren't going to fall anytime soon.

There will be incentives and discounts as always, but overall prices are only going one way.

Buy one now, before you miss the ladder, or something like that.

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Will it continue after February if there is any money left?

I want to buy a newer car but am determined not to buy while this car price inflating scheme is still on.

Whilst dealers will surely have been using the government supplied £1k to bolster their own margins by as much as possible (i.e. you could have got the discount anyway without scrappage), there are still deals to be had on new cars as sales were down in 2009, even with the stimulus factors like scrappage and reduced VAT to boost them. This means things will be even tougher for new car dealers in 2010 as those disappear. You can take your chances on another deflationary collapse in new car prices down the line but what deflationists always seem to forget is that productive capacity goes down in a recession too, not just money supply.

As for secondhand it's simple supply and demand. People who might have sold a 1-2 year car and bought a new one are hanging on to them, reducing supply of decent 'nearly new' motors. This effect is trickling down too. At the bottom end, the pool of really cheap old cars (10 years or greater) has been taken out of play by scrappage. Lots of people who might have bought new are now looking to buy secondhand instead, to save money ... but of course the extra demand plus reduced supply is pushing s/h prices up.

The best hope for cheaper s/h cars is that another economic dip simply forces people with expensive to run cars or those who bought new cars on finance to sell up thus increasing supply. Even then I'll bet that decent, economical, average or small cars will hold their resale value well.

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You're going to be disappointed. Car prices aren't going to fall anytime soon.

There will be incentives and discounts as always, but overall prices are only going one way.

Buy one now, before you miss the ladder, or something like that.

Sounds like you don't have much confidence in our marvellous sterling notes. It's not like houses is it? Sterling devalues so our houses are cheaper for foreigners to buy. Surely they won't buy cars as well? After all they make most of them.

I'm hoping for some car dealer fear and panic when the scrappage ends if sales drop off.

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Whilst dealers will surely have been using the government supplied £1k to bolster their own margins by as much as possible (i.e. you could have got the discount anyway without scrappage)

The dealer have to match the governments £1000.

So if the government offers £1000, the dealer must offer £1000, making a total discount of £2000.

In Germany, the government funded the entire £2000.

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The car scappage scheme has been great for countries like Germany & France who have been the real winners. When these various scrappage schemes come to an end, I think we will see these countries falling into a double dip recession.

I dont know anyone who was conned into buying a car at the 2k inflated price. Most bought from auctions where car were prices reasonably low for a 2 year old, low milage car.

What fool buys new, unless your leasing for a business.

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