The UK Government’s VAT hike could hit Angus car traders in the pocket despite most dealers getting off to a steady start to the year.
Last year’s scrappage scheme provided a welcome shot in the arm for the industry, but with that safety net now gone smaller firms face an uncertain future.
Geoff Swankie of Canmore Motors in Forfar said it would likely be independent garages that are worst affected by the VAT increase.
He claimed it was a common misconception used car dealers did not have to pay VAT in the same way as firms selling new vehicles.
Mr Swankie said, “We have not had a bad start so far this year.
“I would say that taking in to consideration the weather we have actually been busier than this time last year.”
He added, “I think a lot of people are not aware that we pay VAT on any profit we make on a car.
“It is something that will certainly impact us this year.”
Mr Swankie, who co-owns the small business in High Street, added that consumer confidence appears to be on the rise in Angus.
He said, “It’s mainly because it has been two years since we started seeing all the headlines and the downturn kicked off.
“If people have got money just now then they don’t seem to mind spending it maybe because they know they are not getting any return by keeping it in the bank.”Business ‘steady’Sales manager for Mackie Motors in Brechin, Ryan Urquhart, said car manufacturers were endeavouring to do everything possible to stop the VAT rise being passed to the customer.
He said, “Since the new year we have had a great start and it’s been a busy couple of weeks in general. The VAT increase doesn’t seem to be putting people off and manufacturers are offering some good deals just now to avoid passing on the full 20%.
“Business has been steady with both new and used cars, but I wouldn’t say either are exactly setting the heather on fire.”
He added, “We have a big focus on prospecting existing customers just now, it is one of our main sales areas.”
Several of the larger car firms are set to launch electric vehicles this year and reduced-emission cars can already be purchased from many dealerships.
However most outlets will have to pay a fee for the right to sell the battery-powered cars and the lack of charging points in Scotland means the machines are unlikely to take off in rural areas such as Angus for several years.
Mr Urquhart said, “The investment required to get involved at this stage would be quite substantial.
“But these electric cars are a lot better than people think and they will be coming in at around the same price as a diesel, so they are quite affordable.
“I think once they have been in for a while and there is a better infrastructure in place for charging up, then we will really begin to see them taking off.”
Derek Mitchell of Guthrie Bros in Montrose said business there benefited from a connection to the Aberdeen car market.
He said, “December was okay but I think it is still to early to tell how it will go as far as January and the rest of the year.”