Car sales buoyant as isles economy shows renewed signs of vigour

In a sign of renewed economic vigour in the isles, garages sold twice as many cars last month as they did during the same period in 2008, according to figures from the Society of Motor Manufacturers and Traders (SMMT).

Fifty-one customers queued up to collect their vehicles in the weeks leading up to Christmas compared with 25 in the previous year. In total new car sales in Shetland reached 794 during 2009 – up from 767 in 2008.

The rise in sales is only partially attributable to the success of the government’s car scrappage scheme which was introduced last year to help perk up an industry facing major cut-backs in the face of recession.

Launched last May, the scheme offers motorists a £2,000 incentive on a new car provided their road-worthy trade-in – registered before 31st August 1999 and fully taxed and tested – is scrapped.

Motorists struggling to keep old cars on the road have been making the most of the new sales incentive, but garages will have to wean themselves off scrappage soon, as the government’s pot of cash will run dry by the end of next month.

Car dealers in Shetland have certainly benefited from the scheme, but say they have faced problems at the same time.

Central Garage in Brae enjoyed a successful 2009 with 159 new vehicles being sold – 10 of which passed through the showroom doors in December.

Manager of the long-established Citroën dealer John Robertson said scrappage had helped achieve those figures, although the business had to deal with supply problems during the year.

“We certainly killed two or three old cars last year,” he said. “We had a lot of hassle waiting for cars during the year. We had to wait months for things like C3s [the Citroën super-mini].

“When the recession hit folk stopped buying big cars, but they probably wanted to buy more peerie cars instead. But there was a knee-jerk reaction from the factories and they cut production of everything.”

Good though scrappage has been for business, Mr Robertson admitted “it’s got to stop” although he added: “We’ve lived without it before and we’ll live without it again.”

The scheme has been part-financed by manufacturers which stump up half of the £2,000 discount on new cars, with the other half coming from the government.

Mr Robertson said car companies would still be throwing that money at the market to help finance cash-back deals or other incentives, adding that the supply of eligible vehicles for scrappage was “not inexhaustible”.

Ronnie Gair, of M&R Gair in Lerwick, said he had enjoyed one of his best years ever in 2009 – and that was without relying too much on the scrappage scheme. He said the last quarter of the year found new models appearing at the Subaru dealer which “suited clients” very well.

“We were in double figures for the Forrester range which is very good,” he said. “Since we came back after the Christmas break I’ve nearly sold out of second-hand cars.

“We did have a really exceptional week last week and today and yesterday we sold some cars again. I’m going to have to start looking for more stock.”

He said he had been “cautious” about sales prospects given the VAT increase coupled with price-hikes imposed by manufacturers.

But he said the recent poor weather had suited business well, with plenty of folk showing interest in the four-wheel drive range of cars on offer.

The scrappage scheme has not played too big a factor at his garage during the last year, however.

Mr Gair said he did honour the one or two qualifying candidates that came along, but said profit margins are tight under the scrappage rules.

He said most people with older cars tend to buy vehicles at the budget end of the market.

“If you build your business on that scheme you’re going to struggle when it comes to March and that assistance disappears,” he added.

Mr Gair said the scheme had caused problems in the used car market as well, with people looking for older cheap cars unable to source them.

Down the road at Leask’s, the Suzuki dealer also enjoyed its share of the success during 2009.

Andrew Leask said he had enjoyed a “very good” year, although he said the December boost was slightly misleading.

He said supply problems meant some people who had ordered new cars around August or September found they were only being delivered in December. “A lot of them weren’t December sales,” he said.

He added extra deals and cash incentives would continue to tempt buyers through the doors even after the scrappage scheme ends.

In the meantime, Shetland Amenity Trust has been busy dealing with cars at the other end of the scrappage spectrum, and trumpeting the scheme’s environmental benefits as well.

The trust has seen a 23 per cent rise in the collection and disposal of what it calls end of life vehicles since the scheme was introduced.

The trust’s environment project officer, Mick Clifton, said: “In one way this is a reflection of our throwaway society – if something is old we tend to throw it away and buy a new one rather than repair it.

“On the other hand 85 per cent of these end of life vehicles are being recycled and this figure is set to rise to 90 per cent very soon.

“New cars also tend to be safer, less polluting and contain many more recyclable materials which is very good news for climate change and the environment in general.”