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EMERGENCY BUDGET 2010: Comments from the business car industry

Date: 22 June 2010

Views from the business car industry including Enterprise, The Warranty Group and the AA.

Rob Ingram, Director of Business Rental at Enterprise Rent- A- Car:

"This budget has done exactly what it promised to do - make major cuts to a broad cross section of departments and industries, to improve the fiscal deficit. Whether it will do this by 2015 as promised, we will just have to wait and see, but as an Emergency Budget, we can take some positives from this, particularly the drop in corporation tax and the guarantee that capital spending won't be cut. However, the public sector has taken a major hit today, and the drastic cuts that will continue until 2015 will have a major impact on how these services are run and managed.

"This age of austerity brings with it a need for creativity in business and as these measures take hold, it is imperative that we maintain innovation in business to understand how to work with the public sector to increase savings through alternatives to mileage reimbursement, combat the increases in VAT and assist the private sector through highlighting tailored rental offerings that will help make cost savings."

Ian Simpson, sales and marketing director, The Warranty Group:

"The Budget was advertised as being a tough one and that has turned out to be very much the case. As far as the motor industry is concerned, the overwhelming worry is the effect that it might have on the slow recovery that we have seen over the last few months. Will measures such as increased VAT and frozen public sector wages mean that retail and fleet customers are more likely to keep their wallets in their pockets and make do with their existing car for a little longer yet? We believe in this economic climate that warranty, service plan and asset protection products will continue to see increased levels of popularity as dealers and manufacturers seek to overcome any lack of confidence on the part of the buyer by ensuring that they have credible 'safety net' products in place. It is all about providing the customer with a complete package that provides the automotive peace of mind needed to make a purchase."

Paul Ashton, managing director, Equalease:

"In a very real sense, the most important thing about this Budget is that it has happened. Since the Election, there has been a general feeling in the fleet sector and the wider business community that perhaps major decisions needed to be deferred until the coalition Government made its economic plans clear. It has now done so.

"There are some tough measures heading our way - especially the 20% VAT increase - but at least we now know what they are and can get on with working in the business environment that they create."

Edmund King, AA President, said:

"Desperate times may need desperate measures but the AA does not want drivers to be left in dire straits - paying more but getting 'money for nothing' in terms of congested roads and more potholes.

"This budget brings short-term relief at the pumps but extra duty and VAT will hit motorists in the future.  Motorists will be relieved that there is no immediate increase in duty at the petrol pumps but will have to prime themselves for a 1p increase in Oct and another 0.76p plus extra VAT in January. These increases will add an extra 4.6p to petrol prices already at record levels.

"We agree that as the cost of fuel continues to rise that the Government should look again at their promise for a fair fuel price stabiliser.  Already our AA Populus survey shows that 67% of drivers are cutting back on journeys, cutting back on other expenditure or both due to the high cost of fuel.  With the proposed freeze in public sector pay, and many private sector firms, a freeze in fuel duty would have helped millions to remain mobile and in work."

"Increases in Insurance Premium Tax are worrying as they could lead to more uninsured drivers and growth in the motoring underclass."

Neville Briggs, managing director, CFC Solutions:

"There are a few points in here that are better news than fleets might have expected - for example, no rise in fuel duty - but overall the Budget is every bit as tough as we had been warned. The question is whether the more swingeing moves such as the 20% increase in VAT will inspire businesses to work successfully within a new atmosphere of austerity or tip the economy towards something close to a double dip recession. It's very much down to all UK businesses to make sure that the latter doesn't happen. The accent for fleets will very much be on increasing still further the level of cost control that has been achieved since the start of the recession while getting the most out of existing assets, and we will be working very closely with them to help achieve this."

Ken Trinder, head of business development, Epyx

"With so many major vehicle leasing companies being owned in part or completely by banks and other financial institutions, it will be interesting to see if the new £2 billion annual bank levy has any impact on the sector. It should, in the long term, reduce bank appetite for risk, so it is very much a question of whether the banks view vehicle leasing as a risky venture or one with a long term, profitable future? The indications we see suggest that now the economy has stabilised and is slowly starting to grow following the recession, the latter is very much the case."

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