With VAT rising to 20 percent
in the UK in 2011 – meaning vehicles that cost £10,000 will cost
consumers an extra £500 – the automotive industry confidently
expects a surge in sales as 2010 comes to a close.

Nevertheless, automotive
expert Colin Tourick has predicted the VAT hike will actually cause
a brief spike in sales in the first days of 2011, before the
increase comes into play on 4 January.

“There is going to be an
enormous spike in car registration on 2 and 3 January,” Tourick

“People don’t want to buy
cars in November and December and find out they will soon have cars
classified as a year old. They want to buy their cars in

Begbies Traynor partner Nick
Hood agreed any sales boost would be short-lived.

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“The impending rise in VAT
may boost sales in the immediate short term, but overall the
appetite for the industry’s products will inevitably be subdued in
these times of austerity,” Hood said.

Tourick also felt leasing
would become more attractive to buyers in the new year.

“Leasing is going to become a little bit more attractive
because leasing companies can recover the VAT when they buy the
cars,” he added.