It could be carnage in the car market next year, with the extra 2.5 per cent on VAT coming in as consumers brace themselves for a tough year of cuts, especially in the public sector.
So it’s not surprising that Land Rover is declaring a VAT freeze as part of its winter marketing campaign, with vehicles ordered before 31 December and registered between 4 January and 31 March charged at the existing rate.
Already car sales have declined in each of the four months since the end of the car scrappage scheme, and October was way down at 22 per cent below the same month in 2009, despite some consumers buying early so as to avoid the VAT hike.
While Land Rover is at the premium end of the market, where the VAT rise is highest in real terms, it is the volume manufacturers such as Ford, Vauxhall, Renault, Nissan and Fiat that are likely to be worst affected. It will take a lot of smart advertising and marketing to prevent their sales dropping through the floor.