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In UK, there has been a tremendous increase in their car sales. “The Society of Motor Manufacturers and Traders (SMMT) said 168,942 new cars were registered last month, an increase of 31.6% compared with October 2008.”
There are several reasons to how the UK car sale surged:
- There was a government policy in increase VAT for old cars starting from next year 2010. Many costumers wanted to avoid this, so there has been an increase in car sales.
- There was another government policy in supporting old car owners to buy a new car. The government has supported these owners up to a £2,000 discount for replacing 10 year or more cars. This cost was said to be shared between the government and automobile producers.
- Consumer’s purchasing power has increased sharply, which led to more spending such as buying a car. This was due to reduced mortgage interest payment, lower utility bills and a moderation in inflation.
Looking at these 4 reasons, it is clear that government role in increase of car sales was pivotal. Many people criticize about government supporting for companies with deficit. However, government support is sometimes effective. Also, government policies in reducing mortgage interest payment, increasing VAT, and etc. was a good approach in lifting up the crumbled car industry.