What will happen to the car market in 2010?

Starting a used car business in 2007 was like opening a tanning salon in Pompeii the day before a few natives started to wonder why, after a giant plate of pasta, they thought they could hear their stomach's rumbling.

However, despite the very challenging trading conditions we turned a profit. 2009 has been rewarding as we have learnt from painful mistakes made in 2008 and the market has returned in force.

So having experienced the euphoric highs and depressing lows, what on earth is 2010 going to throw at The Internet Car Lot?

The market starts with new car sales.

The scrappage scheme is forecast to run out of funds in February and there is no sign yet that the Government will extend the scheme. Despite the end coming close to election time, with Government spending likely to be the key campaign issue, throwing money at shiny new cars could be difficult when so many cuts are likely in public spending.

VAT returns to 17.5% and there are many (myself included) who thinks it could rise to 20% post election. As VAT is payable on all new cars this will add further cost to the price of a new car.

The weakness of the pound has already seen Daihatsu pull out of the UK car market and most manufacturers have implemented price rises through the course of this year. Whilst there a number of manufacturers who build cars in the UK, only certain models (with the exception of JLR and MINI) are positively affected with the majority still coming from primarily the Eurozone.

Therefore I think we will see a very tough new car market and one which will be under severe financial pressure. I was speaking to a German manufacturer dealer principle yesterday and his 2010 target is the same as this year so I am concerned some car makers will be in for a shock.

Lest we forget that the forecast for the 2010 economy in general is not good. The term 'w-shaped recession' is being bandied about regularly and it is difficult to argue against given economic data.

So, how will that affect us?

Positively I hope and using common sense there is no reason to be doubtful.

There is still no overall surplus of used cars. The majority of registrations in 2009 have been genuine retail or business customers, not hordes of pre-registered vehicles like we saw in 2008.

Dealers do not have the funding levels available for pre-reg to be openly available and as discussed already, many manufacturers will find it too costly to support this form of marketing activity.

Many people may be dissuaded from a new car if the average new car price rise is as much as 5% so may look for value in used cars instead.

In summary there is no way that cars will rise in price like they did throughout 2009 but I think it is fair to say the prices will remain very consistent.

Jamie