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Possible VAT hike will add to post-scrappage hangover

The new showroom taxes starting April 1, the probability of a new government and a rumoured hike in VAT could add up to one large post-scrappage hangover. 

A rise in VAT is the biggest concern, with bosses at the Geneva Motor Show saying such a move could be "disastrous" for business, according to Headlineauto.

New showroom taxes will hit high emission vehicles hardest , but additional VAT will hit all big ticket items.

Addressing what to do at the end of scrappage, Peugeot UK boss Jon Goodman said he will be relying on new products rather than introducing Peugeot's own version of a scrappage scheme as other manufacturers are doing.

"We have got good offers available through our dealers and great new vehicles in the 3008 and 5008," he said.

"I don't think it's sensible to speculate over increases in sales tax. It might make things tough in the second half of the year but it is not impossible to adapt."

He said of Peugeot's future plans that a key move will be its focus on winning more fleet business. "We have taken on nine new people in our fleet department so that we can get in front of more customers."

Fleet business is one reason why Ford of Britain managing director Nigel Sharp is optimistic. "Fleet managers have been extending leases in the current economic climate but they can only do that for so long.

They will have to refresh their fleets before they lose out on residual values."

Light commercial vehicle sales remain a disappointment and overall we are expecting sales to fall around 10% this year from 300,000 vehicles in 2009.

The important thing is that Ford and its dealers make money so we have got to ensure that we keep good control over vehicle stocks."

Kia managing director Michael Cole said: "We are still deciding what to do post scrappage but have made no firm decisions as yet.

As far as VAT is concerned I think the market accepted a return to 17.5% at the beginning of the year because it was what people had been previously used to.

A move to 20% would be potentially damaging. Car buyers are going to have to come to terms with that because it is going add quite a bit to the price of vehicles."

Tell us your thoughts on what you intend to do when scrappage ends on our online poll.
 

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