SMMT: Car sales bounce back will take some time
Don't feel bad, things are going to be alright - that's the message for the car industry coming from the SMMT's chief execurtive Paul Everitt.
Speaking to Autoblog, Everitt said car sales will rebound, but warned it could take some time yet.
'I think the truth is that we are in for a long haul here,' said the SMMT boss. 'We're not going to suddenly see a big bounce and the hundreds of thousands of car units we've lost during the recession suddenly rebound.
'Everybody has to steal themselves to the fact that the economic circumstances mean that growth will be slow and will take a while. It's going to be two or three years before perhaps we start to get back to levels we might be more familiar with.'
Everitt said that next year the new car market will top two million units (this year it's likely to be 1.93m) but added this will be a slow process – not the dramatic bounce back many have been predicting.
'If we get to 2.1m cars registered next year I'll be out having a party,' he joked. 'I don't want to be negative about it, but we need to be realistic. The economic circumstances that we face in the UK are difficult because the whole thrust of what government is doing to reduce debt and rebalance the economy.
'At the same time inflation is higher than we would like, we've had a VAT increase and no one is really seeing an increase in their salary to compensate, so the cost of living is squeezing and that is not going to go away over the next year or so.'
However, Everitt does believe that there is some pent-up demand in the new car market – and it's up to dealers and manufacturers to trigger that with buyers.
He argues that buying a new car shouldn't be seen by motorists as having to find a £10k or £15k lump but rather as a way of fixing molnthly outgoings.
'My gut sense is there is some stored up demand out there and it's about what triggers those buyers back into the marketplace,' he explained.
'One of the areas we are looking at is that people are alarmed about buying a new car because it's a lot of expense – these are big ticket items – but actually most people don't buy outright, they buy in a variety of ways and it's now easier and you get a lot more certainty in what your monthly costs will be when you buy a new car.
'I'm not sure we have articulated that to customers. Those running a five-year-old car could see the numbers start to make sense – they are not unattractive.
'The upfront cost is relatively low, most come with some sort of service package, most will be more fuel efficient so as a package there is an argument to be made.'
He added it was up to the car industry to get these important messages across to trigger buyers into coming back to the market. What would make you buy a new car? Let us know by posting your comments below.