Despite improving new car sales, industry experts are predicting a challenging next 12 months for the automotive industry.

November new car registrations were up 57.6% on 2008 to 158,082 units, a comparable figure to November 2007 volumes. According to SMMT, the Government’s scrappage scheme accounted for 21.6% of the registrations which were also improved due to customers wanting to avoid the January increase in VAT.

David Raistrick, UK Manufacturing Leader at Deloitte commented said that while the rise in new car registrations was positive, the automotive industry should not lose sight of the challenges that are ahead in 2010.

“Within a short period of time early next year we will see the scrappage scheme end and the VAT rate return to 17.5%,” said Raistick. “We may also see interest rates increase next year. Furthermore, car manufacturers may find themselves needing to implement price rises due to the low value of sterling increasing the cost of imported cars and parts.

“The automotive sector must be prepared to deal with these challenges in order to ensure a long lasting recovery.”

Source the Manufacturer