Car shortage claims dismissed by SMMT

Warnings that next year's VAT increase could create a shortage of new vehicles at the end of this year have been dismissed.

The warning from Lex Autolease follows reports that fleets will be tempted to bring forward orders for new cars to avoid the added VAT burden.

"It's likely that many firms will find the temptation to replace their older vehicles too strong and this will create a huge demand for new vehicles to be delivered by the end of the year,” said Marcus Puddy, head of consultancy services at Lex Autolease, said. “It's not clear whether current production levels will be able to cope.”

But bringing orders forward could cost firms more in vehicle depreciation, early termination charges and increased administration.

"Company cars account for around half of all new vehicles purchased each year, so the prospect of shortages occurring is very strong,” said Puddy.

He warns that if many fleets bring forward their replacement cycle at the same time, leasing companies may take a different view of residual values because of the increased number of cars coming off fleet that will outstrip demand both now and at the end of term.

“Also, manufacturers may not be able to supply the car this year, so it is important that firms seek reassurances over delivery timescales."

However, the SMMT, which represents car manufacturers and dealers, said it is satisfied current production levels will be able to meet any increase in demand.

“I have spoken to a number of vehicle manufacturers and also to our in house economists. None reflect any concern about a potential shortage of vehicles at the end of the year. In the most part, they are not expecting any major impact but some have said that they are confident that enough notice has been given to allow for potential changes to be made in production cycles if necessary,” SMMT spokesman Nikke Rooke told Fleet News.