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Government could enjoy £6bn 2013 tax boost thanks to franchised dealers says Vertu boss

September's new car sales look set to be a bumper month for the taxman.

As the UK's reputation for a sales' oasis in a wider European desert for the sector, the Government has been revealed as a beneficiary in what has so far been a 17-month, year-on-year boom in new car sales.

The extent of the tax take has been revealed by AM100 dealer group Vertu Motors' chief executive Robert Forrester, ahead of the plate change next week. He puts it at nearly £1 billion for September alone - and nearly £6bn for the year.

Forrester said: "This September it is not just motor retailers who will be experiencing a bumper month.

"So far this year the Society of the Motor Manufacturers and Traders estimates that new car registrations have been growing by 8.4%. If that growth rate continues, last year’s figure of 359,000 September registrations will easily be beaten – with new car registrations likely to be in excess of 380,000," said Forrester.

Today the SMMT revealed the March '13' plate had outsold the past nine registration plates.

"All but a small minority of cars are petrol or diesel vehicles that attract vehicle excise duty and with average vehicle emissions of 133 grams, the average duty is £125 per car per year.

"It is a commonly held view in the sector that the average price of a new vehicle is around £15,000. The VAT content of a £15,000 purchase is £2,500. In fact the average price of a mid-range model of the current SMMT top 10 selling vehicles is £16,233

"Using these simple statistics it is possible to see that the Government will be a winner on September 1st and by the end of the month George Osborne will have received nearly £1billion to help him pay down the deficit.

"Furthermore, if you take the SMMT forecast of 2.2m new cars being registered in 2013, you can see that the Government is having its best motoring windfall in years.

"For the entire year you can hazard a guess that the Chancellor will receive nearly £6billion from VAT and VED on new car sales. Put another way - the revenue generated from new car sales is more than the budget of the Department of Energy.

"The astonishing success of the UK motor retailing sector is one of the key drivers of growth in this economy. The sector is benefiting from a triple boost of low interest rates, fantastic products and robust used car residual values, resulting in very affordable costs to charge when customers change cars."

A combination of positive econmic factors, led by motor retailing, but now including housing sector with the Government’s First Buy scheme, national house prices increasing 0.8% in June, coupled with the Bank of England’s long term interest rate plans, Forrester said "there is real promise that consumer growth can return to buoyant but sustainable levels. Indeed, there is grave danger of the UK having a boom".

"The products are the best they have ever been. Manufacturing plants in new economies, combined with great technology from the West and Japan, are producing cars with great design, new technology and stable prices; in fact products such as Dacia and Suzuki have resulted in the real terms cost of entry level cars coming down.

"Finally, dealerships have been transformed in the last 10 years.

"Compared to dealers in the rest of Europe the UK is streets ahead.

"I attended the launch of the new Range Rover Sport at our Farnell Land Rover dealership in Leeds to see virtual reality mock-ups for customers to see their prospective cars in different colours and specifications and witness real excitement from buyers about a British designed and built product that is world class.

"Every day I witness the professionalisation of salesmen and technicians, who now behave more like advisers and engineers. Motor retail has led the way with an approach to retail that should be copied by the High Street. Like Apple’s stores, showrooms are cool places to be, enabling customers to try the products and talk to experts.

"The economy is bouncing back, growth has returned and the motor retailer sector can take pride in being a spur, not just a beneficiary, to the country’s changing fortunes."



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