Government may have to step in and incentivise car buyers with a scrappage scheme or VAT cut, believes Pendragon boss

Time 1 year ago

Pendragon CEO Bill Berman believes the government will ‘have to’ step in and incentivise car buyers later this year.

If we want to see the current sales success in car dealers continue, the boss of one of the biggest dealer groups says a VAT cut or scrappage scheme will need to be implemented.

In an exclusive interview with Car Dealer Magazine – which you can watch above – Berman says he is hopeful ministers will help incentivise car buyers like they have with the housing market.

He said: ‘I think [the government are] going to have to – they’re really going to have to. 

‘Automotive is too large a piece of the overall puzzle – too large a piece of the overall economy – and at some point in time they are going to have to do something.’

Berman thinks either a scrappage scheme or VAT holiday would work best. The former has been implemented in Germany and has seen sales rocket. 

There, electric cars are incentivised to the tune of 9,000 euros (circa £8,250), and many buyers are ordering them and are happy to wait months for them to arrive.

Berman added: ‘Whether it’s a scrappage scheme or a VAT or rate holiday, they really need to do something either later into this year, or early into next year, to kind of get people back into the market and give them an incentive to do it.

‘A perfect example is what they did with the stamp duty on real estate – the amount of money people are saving because of that… means the increase is propping up the economy and that same thing would happen if they did either one of those things for automotive.’

Sales boom

Car dealers are currently reporting buoyant sales in both the new and used car areas, with some dealers reporting they’ve more than made up for the losses they incurred during lockdown.

With used car prices going up, many are making considerable profits in their used car departments.

The Pendragon boss said he believes a VAT cut for the automotive industry would be the best way of boosting demand across the industry.

A scrappage scheme would likely target sales of green cars – like Germany – and that wouldn’t bolster all of Berman’s brands. 

He said: ‘I think the VAT holiday would be the one that serves us best. 

‘It’s a wider swathe of the economy, a wider swathe of buyers and a wider swathe of brands.

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‘Some of the JLRs and German brands of this world might be hard pressed to meet some of the criteria a scrappage scheme might have, but a VAT holiday would sit across all sectors across the board.’

Previously, the government has said that it will not be implementing a scrappage scheme, and it is thought that incentives for the industry are largely off the table while sales continue to rise.

It would be hard for the industry to go cap in hand to the ministers when many of the dealer groups are reporting record sales months. 

James Baggott's avatar

James is the founder and editor-in-chief of Car Dealer Magazine, and CEO of parent company Baize Group. James has been a motoring journalist for more than 20 years writing about cars and the car industry.

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