VAT cut fails to boost auto sales

Date: 12th February 2009

The government's VAT cut has failed to boost sales in the motoring industry, statistics have shown.

Research by the vehicle information group HPI revealed that 41 per cent of car buyers are "unlikely" to make a purchase based on the reduction.

The 13-month cut from 17.5 per cent to 15 per cent was announced at Chancellor Alistair Darling's pre-budget report in November in a bid to increase consumer sales.

Automotive director at HPI, Daniel Burgess, said: "Confirming our worst fears, measures to incentivise buyers to the new market are failing.

"A staggering 86 per cent of those we surveyed reported that the VAT cut had not motivated them to consider a new car purchase, adding to the intense pressure already faced by the motor industry."

He added that consumers were "more likely to be wooed" by discounts and special offers by dealerships than the VAT reduction.

A recent investigation by the Federation of Small Businesses revealed that 97 per cent of firms believed that the VAT cut had made no impact on their trade whatsoever.