Fleet News

Car industry counting the cost of referendum uncertainty

Glass’s is warning that uncertainty surrounding the Scottish referendum is already harming the motor trade and that the situation may be worse still in the event of a ‘yes’ vote.

“It is anticipated that the result of the referendum will affect this sector through its significant influence on wider economic trends,” said Glass’s director of valuations, Richard Parkin (pictured).

“Even in the run-up to the referendum, the closeness of the vote has spooked the financial markets and led to a fall in sterling. This has been compounded by news of lower GDP growth rates and reduced business confidence - as monitored by the ICAEW / Grant Thornton index, for example.”

The global head of currency research at Societe Generale in London, Kit Juckes, has stated that sterling is likely to suffer an immediate fall of 3-5% if the Scots say ‘yes’ to independence.

Many other commentators believe that GDP and employment growth would also suffer in the climate of uncertainty created by a ‘yes’ vote.

“All of this is sure to have an impact on the new car sector, as firms will tend to delay investment and consumers will postpone ‘big ticket’ purchases such as cars,” said Parkin.

“Reduced consumer interest will also depress used car prices as supply from fleet and ex-PCP sources continue to increase.

“The only part of the market that might benefit is nearly-new values: most cars sold in the UK are built in the Eurozone, so a falling pound will lead to new car price inflation which will, in turn, have a positive impact on the already depressed values of nearly-new models.”

He continued: “In the longer term, we are not so much concerned by the effect on future residual values of changes in things like the vehicle registration body and the currency used, as by the impact of a ‘yes’ result on the economic outlook for the UK as a whole. And naturally, if there was to be a ‘no’ vote, the used car market would retain its current strength.”

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