New car buyers must order now to beat VAT rise

A shortage of new cars means buyers must move fast if they are to beat next year’s VAT rise according to CAP, the used car pricing experts.

There is now an unusually long wait between order and delivery for many new cars after last year’s recession, coupled with a weak Euro, led manufacturers to slow down car production and focus on supplying other countries.

In some cases even cars ordered today will not be delivered until after VAT rises to 20% on January 4 2011, adding £375 to the VAT-inclusive price of an £18,000 vehicle.

The problem is not confined to the usual luxury and exotic car sectors, with many mainstream brands now reporting lead times of several months.

For example a Skoda Superb ordered today will not be delivered until mid-November. Some Volvo and Audi models will not be available until well into 2011. Volkswagen is seeing lead times of 12 – 14 weeks when normally a new car can be delivered in 5 or 6 weeks. Even the ubiquitous Ford Fiesta cannot now be supplied until mid-September.

While the VAT increase is already unavoidable for some, the situation is also causing headaches for dealers. They now face the challenge of negotiating a part-exchange value today with the new car customer – not knowing what that car will be worth when the deal is finally concluded.

Mark Norman of CAP said: “Anyone with imminent plans to buy a new car needs to move now, especially if they have a specific model in mind because they may already find they cannot beat the VAT increase.

“This is not confined to the more prestigious end of the market but applies to many brands you would not normally associate with long lead times. The need to make enquiries early is particularly urgent if you want optional extras because they will be subject to special factory build, with little or no chance of a suitable car already being in stock.

“Car manufacturers will always focus on the territories where exchange rates create a more profitable environment. What happened last year was that many switched focus to other countries, such as the United States, because of the weak Euro.”