Car market remains unstable despite bailout

Despite a proposed government bailout package to the tune of £2.3bn, the UK motor industry continues to reel from anemic sales and low consumer confidence.

According to a report from the Society of Motor Manufacturers and Traders (SMMT), the number of car registrations decreased by 30.9% in January.  Further evidence suggests that the market will continue to decline by 20% in 2009 alone. 

UK automobile manufacturers maintain that the falling value of sterling has made an increasingly volatile market even worse.   In order to offset the depreciating value of the British Pound, Vauxhall and Ford announced a raise in prices from 4.7% and 5% respectively, with other manufacturers expected to follow suit in the weeks to come. 

The move has angered taxpayers, many of whom argue that the rise in prices will continue to hurt rather than foster consumer confidence.  Matthew Sinclair, a research director at the Taxpayer’s Alliance, said:

“Too often, bailouts serve the interests of politicians and industry but do little for consumers and are poor value for taxpayers’ money.”

Though the cost of new cars has declined considerably in throughout 2008, customers have been hard-pressed to secure car finance packages suited to their needs. 

A return to an increase in car prices is not likely to restore consumer confidence – a particularly devastating blow to UK lawmakers in the wake of the recent bailout plan.  John Thurso, the Liberal Democrat business spokesperson, said:

“As I understand it, the inability to sell cars is the problem.  I would have thought the last thing to do in difficult trading conditions was to put prices up.”

Car manufacturers have continued to call on further bailout schemes to help resuscitate the ailing market.  Such schemes, they claim, could help dealers broker more customer-friendly finance packages. 

Customers in the market for a new car should use an independent loan comparison tool before securing a car loan or personal loan. 

Source: Independent.co.uk