INTEREST rates have been held at five per cent for another month.
But a reduction is needed to give car dealers a boost.
‘This is a great time to buy a car, but the prevailing mood of economic gloom is causing consumers to delay big ticket purchases,’ said Sue Robinson, Director of the RMI NFDA.
She was speaking in response to July’s sales figures, which showed a 13 per cent drop on 2007.
‘Government must reduce interest rates to boost consumer confidence,’ she said. People are cutting back far more than necessary because they are fearing recession, rather than actually experiencing it.
‘Some of those who would have had no problem buying a new car are holding off because they feel they should be prudent.’
Disincentives go much further though, she says. Next year’s new road tax regime, fuel costs and environmental concerns are also playing their part. ‘VED changes due to come into force next year could reduce the value of some second hand cars. At the same time interest rates remain high, possibly increasing the cost of buying a new car. Many potential buyers are waiting to see what happens.’
The situation mirrors that we’re seeing in the housing market, where sales have all but dried up due to confusion as to where the Government stands on stamp duty.
‘A reduction in interest rates, stabilization of fuel costs, and clarification over the future cost of motoring could help to boost confidence, and the Government must act now,’ added Robinson.