Barclays: December SMMT car registration figures

Keith Parry, Head of Motor Retail at Barclays, said: "The government's scrappage scheme has been a huge success, drawing people into showrooms and has accounted for almost 300,000 additional vehicles coming onto the market in 2009. Although total new car registrations for 2009 are down 6.4 per cent on this time last year, they are significantly healthier than could have been predicted at the start of 2009 and with the injection of another £100 million into the scrappage scheme in September last year we can expect fulfilment to carry on into early 2010.

Manufacturers such as Hyundai and Kia have benefited from the preference for smaller, cheaper, more fuel efficient cars, boosting dealer networks all across the UK as well as reducing emissions on UK roads, but the ending of the scrappage scheme in February and the VAT increase this month will have negative consequences across the entire industry this year.

However dealers and manufacturers should now be working together to avoid the sales slump by developing deals and offers that take the place of the scheme and continue to incentivise price conscious consumers. And consumers also need to recognise that by shopping around and securing a good deal, it is possible to make savings equivalent to the £2,000 scrappage discount.

Lower car registration figures over the last three years will also mean dealerships need to focus more on developing and changing the perception of the servicing side of their business to grow this revenue stream. Smart dealers will look to offer customers extended care plans and even greater value for money so as not to lose out to independent traders."