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UK car industry in for a tough 2010

Figures from the UK car industry show that like-for-like sales in December were up nearly 40% compared to December 2008, purely and simply because of the impending closure of the car scrappage scheme. However, the massive jump in December sales will bring to an end increased demand for UK cars which stretches back to May 2009.

Prominent figures in the UK car industry believe that sales for 2010 will be affected by the end of the car scrappage scheme, increasing VAT, rising input costs and the falling value of sterling. All of these factors will come together to squeeze the profitability of the UK car industry and while it is unlikely to fall back to the levels seen before the car scrappage scheme was introduced, there will be pressure on UK car sales.

The car industry in the UK had been in terminal decline for many years until the UK government stepped in with the car scrappage scheme. Hopefully we will see an increase in legitimate demand for UK cars in the medium to longer term once the economy has turned and consumers have more money in their pockets. There are even whispers that the UK car scrappage scheme could be reintroduced in the short term.

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