20th February, 2017
Dealer principals should be setting up their defences for next month, as March 2017 is projected to be the biggest vehicle registration month in UK history. As a response to upcoming changes to Vehicle Excise Duty (VED) on 1st April, it is expected many will be flocking to dealerships to finalise a purchase under the current regulations.
We have previously discussed the challenge dealer principals face when managing the fluctuating nature of the auto industry. The amount of activity on showrooms shifts on a weekly basis makes it difficult to fit a routine around their stock and staff. Especially in months of exceptionally strong activity, the need to put in emergency measures and bring in additional staff can have unfortunate repercussions once the rush ends.
Here, we consider the changes to VED, what this means for motorists and dealerships across the country, and some tips National Car Cleaning have learned over the years to help dealer principals avoid March Madness.
What is happening to VED?
On 1st April, changes will be made to how motorists pay VED. It will still be based partly around a car’s CO2 emissions and divided into 13 bands according to these emissions. However, under the new regulations fewer cars will be exempt from these charges and costs will rise for those in less environmentally friendly vehicles.
Under the current regulations, drivers would be expected to pay a first-year rate between £0 and £1,120 dependent on their new car’s CO2 emissions. Beyond that, cars would pay an annual rate again based on these emissions. For example, a car with 166-175 g/km of CO2 would pay a first-year rate of £300 before reverting to an annual rate of £210.
The change will mean a larger first year fee for cars of any level of CO2 emissions, with only zero-emission vehicles paying no VED tax. The standard rate after that first payment would then be set at £140 per year for all bands. Therefore, a car with 171-190 g/km of CO2 pays £800 for its first year, but then pays £140 a year from that point onward. In addition, cars costing £40,000 or more will pay an additional £310 for five years, meaning instead of £140 they would pay £450.
That’s a lot of numbers! Put simply, it means certain cars will be required to pay more tax than before, particularly eco-friendly cars and hybrids. Under the current bands, cars up to 100 g/km of CO2 paid no VED. From 1st April, only zero-emission cars avoid this tax, while others pay the new standard rate of £140 per year. That is why many prospective buyers are looking to complete purchases before these changes take hold.
Readying for the rush
Dealerships that stock these cheap, economical motors will likely bear the brunt of this predicted rush of activity. As consumers aim to beat the April deadline to finalise their deals, it will likely lead to a significant rush of activity on the showroom floor from now until the end of March.
If you’re a dealer principal concerned about the added pressure of this rush, there are steps you can take to perfect your preparations. This is an excellent opportunity to shift stock, as potential buyers will be keener than ever to complete deals – half the battle of persuading them has already been taken care of! Your focus should be on ensuring there is a steady stream of cars available.
Here are a few tips we at National Car Cleaning have learned from our extensive experience partnering with dealerships:
We hope that dealerships throughout the UK are ready for the rush and reap the rewards March Madness could bring them. If you need some support during this busy period or whenever business fluctuates, contact us today. Our team becomes an extension of your business, implementing a comprehensive valeting strategy tailored to the needs of your dealership.
For more information, don’t hesitate to get in touch on 01268 56 50 50 or at firstname.lastname@example.org.