Tuesday, 22 December 2009
As we near the end of 2009 what can we look forward to in 2010?
The end of the scrappage scheme will allow many breakers to take a break from collections and focus on dismantling and scrapping the vehicles they have received.
Looking longer term, I do not think we will fully understand all the implications of scrappage for many months - the impact on scrap prices still has to work its way through - especially as the scrap market is global and the glut of scrappage cars will continue for a while. Parts sales could be weak for a while - too much stock will depress prices, and then as the parts supply is used up prices will strengthen, but in the current economical climate how many customers will want to pay the higher prices?
Residual Values of vehicles could maintain current strength for a while, but these will start to reduce once Scrappage ceases as demand reduces and stock levels of new vehicles increase, causing discounting and distress selling by manufacturers and importers.
VAT change will have an impact on parts and VAT qualifying vehicles, smart businesses have been focusing on VAT qualifying units in the recent weeks and promoting them to ensure that as many as possible are sold. Another 2.5% doesn't sound too much, but on a £10,000 vehicle that is another £250 on the invoice.
Overall though I believe that the Motor Salvage Industry in the UK is a very resiliant sector, that is always looking where they can make a profit, and has the flexibility to survive and come through the year as a stonger, leaner and more efficient operation. All that is needed now is for the Environment Agency to focus on getting illegal operators compliant or taking them out of business - now that would be a real bonus!