New car dealers were understandably apprehensive when the government-backed scrappage scheme came to an end in March of 2010. The scheme offered car buyers a two-thousand pound discount when they traded in old clunkers for new vehicles. It led to ten consecutive months of growth and sales increases of around twenty percent. In addition, car dealers were also told that automakers were preparing to raise prices as a result of the weakening pound. Not surprisingly, industry insiders predicted a difficult summer for the new car market. But that has not come to pass. While the market posted solid sales numbers in the two months following the end of the scheme (March and May), that was expected because most of the sales were covered under the scrappage scheme. June was the first month that the market would have to fail or succeed on its own, without government aid. Dealers were pleasantly surprised when they discovered that dealer car sales increased by 10.8 percent in June. The experts, of course, were confounded. How and why had the new car market posted its 12th consecutive month of growth without the help of the scrappage scheme? There are many plausible explanations. The first and most optimistic is that people are gaining confidence in the economy again. And when consumer confidence rises, people are more likely to purchase big ticket items like cars and homes. While the sales increase of 19.9 percent for the first half of 2010 will inevitably come down, the June sales numbers are encouraging. The market may just continue its year-long streak of positive new car sales.
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