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‘Consider new VED rules’, dealers told

Dealers are being urged by finance companies to get to grips with the long-term implications of Chancellor Alistair Darling’s Budget changes to vehicle excise duty bands.

“In the short-term there will be only a limited impact on consumer buying habits, said Carlyle Finance CEO Mark Standish.

“But looking forward, the changes will be more pronounced,” he said.

“Dealers would do well to understand the changes now, because it should influence the way they sell cars.

“By 2010, when the time the full changes are in place, today’s new car will be a used car.

"The sales advice given could impact long-term customer retention.”

Finance companies are considering how the move to CO2-based road fund licences charges will change buying habits, and the impact on finance provision.

If more retail buyers choose smaller and cheaper cars, they will need to borrow less money.

Finance providers and manufacturers will also face the challenge of making heavier-polluting cars easier to buy through incentives.

There is also likely to be an impact on financing sales of used cars because more expensive VED on higher-CO2 models will affect their residual values.

“In the short term, the big losers are large petrol-engined cars,” said Standish.

“Over the next two years they will see their annual road tax bill climb by between £100 and £200.

“Effectively, this Budget is likely to wipe hundreds of pounds off the used value of such large petrol-engined cars at a stroke.

“The headline-grabbing changes don’t come into force for another two years but, with the dramatically increasing cost of motoring, consumers will start to consider their options for the future now,” he said.

“In the showroom, we need to ensure we can help the customer understand the impact of their car choice and provide the right mix of stock.”

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