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SMMT research shows Treasury benefit of car ownership

A car generates five times its retail value in its lifetime, with the Treasury and finance companies taking the largest slice, according to research by the SMMT.

Its report, 'Who's milking the car industry', reveals that the biggest single winner is the Treasury, with the Chancellor taking more than 23% of total income generated. This comes from VAT on new and used sales, Vehicle Excise Duty (road tax), petrol tax and insurance premium tax.

Exceeding the showroom price by more than £3,000, the report shows the government receives over £11,000 during the car's nine-year life.

In that time the car would have generated more than £50,000 in income.

The report tracks the financial beneficiaries of a car from new in 1992 to its end of life in 2000, logging different income streams year on year. The model used for this report is a standard mid-range saloon. The price new is assumed to be £9,400 including VAT. During its life the car travels an average 12,000 miles per year. Fuel consumption is assumed to be 33 miles per gallon. The car has six owners from new in 1992 to the end of its life in 2000.

Other sectors can expect income from the car too. Finance houses and insurers pool £8,000, 16% of the total.

Used car dealers and private sellers benefit from its re-sale value. Assuming just five changes of owner, the total income from used sales hits £13,900. There are also less obvious beneficiaries, including car parks, cross channel ferry operators and even rail companies.

SMMT chief executive Christopher Macgowan said, “We all know the enormous social benefits that the car has brought to millions of people. What this report shows is that each car has a very real economic value too, not just for those involved in its manufacture and first sale, but for all those who depend on its significant life span as a major source of income.”

Click here to see the full SMMT report.

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