Car dealers would welcome a reduction in VAT on new and used car sales in this week’s budget announcement, according to Close Brothers Motor Finance.
Chief executive James Broadhead said: “The last few years have been somewhat challenging for many of our dealer partners and whilst we have seen steady growth in the volume of new and used car sales in recent months, there still is more that could be done to help dealers.
“Our dealer partners are telling us that what they would like to see most in the budget announcement next week is a reduction in VAT on new and used car sales.
“Such a decrease would provide a real boost by allowing dealers to sell new cars for a lower price, making them more affordable and attainable. A reduction on VAT on used cars would enable dealers to sell the cars for a lower price and also retain a higher profit.
James continued: “As vehicles are expensive commodities, there is always a sizeable VAT bill to be paid on the profit margin - a decrease would act as a double incentive because dealers would benefit from a smaller VAT bill and end customers would ultimately benefit from a saving on purchases.
“Customers are still very price sensitive so any initiatives that enable our dealer partners to offer competitive pricing are very welcome. Other factors such as lower fuel prices, interest rates and of course, attractive finance packages will continue to help encourage people to change their cars and drive further growth in the industry.”
Close Brothers Motor Finance work in partnership with over 8,000 dealer partners across the UK and Ireland, providing specialist finance for new and used cars, motorbikes and light commercial vehicles.