2013 Budget Statement could prevent downturn in RVs, says CAP
The company had been highlighting growing fears that the Eurozone economic crisis could prompt manufacturers to drive new car supply harder into Britain, pushing registrations back toward historic oversupply levels and impacting on RVs.
However the company reckons that the Chancellor’s downgrading of Britain’s economic growth forecast, together with his call to ‘keep interest rates lower, for longer’ will put pressure on exchange rates – potentially making new car business less profitable for most manufacturers.
As a result CAP’s senior editor for forecasting, Dylan Setterfield, has not adjusted the company’s forecasts of a short-term reduction in values for 2013 and further limited price falls in 2014/15.
Setterfield said: ‘For a while last year it seemed there was a real risk of the slump in registrations in Europe forcing manufacturers to drive supply into the relatively strong UK. Experience has shown us that when registrations approach levels we saw in 2005 to 2007, then residual values are severely weakened by eventual oversupply.
‘The prospects of that being repeated have been receding since Sterling began weakening in the 2nd half of 2012. Sterling initially weakened further, as an immediate response to the Budget statement, and although it recovered in the following 24 hours it remains at a level which limits manufacturers’ scope for heavy discounting in the UK.
‘We will still see forced registrations but the intensity of such activity will be limited to specific manufacturers, rather than an industry-wide trend.
‘The Budget can therefore largely be regarded as broadly neutral in terms of its impact on current residual values patterns and those we have previously forecast for the next three years,’ he concluded.