On Wednesday 6 March 2024, the Chancellor, Jeremy Hunt MP, unveiled his Spring Budget to the nation.
“Today’s Budget may prove to be the last major fiscal event of this current government before a general election. 2024 is a critical year for the automotive retail industry. With the ongoing shift in sales models and the landmark ZEV mandate coming into force, dealers will be under substantial pressure to adapt to the transformative trading landscape. As such, the Budget provided a significant opportunity for the Government to provide a strategic and clear vision to support the automotive retail sector but has been an opportunity which has largely been missed” said Sue Robinson, Chief Executive of the National Franchised Dealers Association (NFDA), which represents franchised car and commercial vehicle dealers across the UK, following the Chancellor’s Spring Budget 2024.
The following measures were announced/not announced which are set to impact the automotive retail sector:
FUEL DUTY
5p fuel duty cut has been maintained and temporarily frozen for a further 12 months until March 2025.
Sue Robinson: “It is a positive move that the Chancellor has heeded our calls in extending the temporary cut in the rates of fuel duty for a further 12 months. This move provides much-needed relief to consumers grappling with a challenging period of global instability and ongoing financial unease. By extending the temporary cut, the Government acknowledges the importance of mitigating inflationary pressures on essential commodities like fuel.”
BUSINESS RATES AND VAT THRESHOLD
The Chancellor announced that full expensing would now be extended to leased assets as well as the VAT threshold increasing from £85,000 to £90,000.
Sue Robinson: “NFDA are disappointed that long-awaited business rates reform has once again been sidelined but notes the Chancellor’s announcements to make full expensing apply to leased assets as well as increasing the VAT threshold from £85,000 to £90,000.
“These rates are now at the highest level ever at 54p in the pound, a drastic increase compared to 34p in the pound when they were first introduced in 1990. This is a further blow to franchised retailers, at a time of zero growth and rising costs.
“This was possibly the last opportunity for a Conservative Chancellor to deliver on the Conservative Party’s 2019 Manifesto pledge to reduce business rates for retail. In NFDA’s 2024 outlook survey, business rates were listed as the top issue dealerships would like to see tackled this year.”
PRIVATE EV PRICE INCENTIVES
There was no mention surrounding the introduction of private EV price incentives in the Spring Budget.
Sue Robinson: “With the Chancellor’s Spring Budget failing to mention private EV price incentives, the UK remains one of the major markets in Europe with little to offer in terms of price incentives for private buyers of electric vehicles. Conversely, due to strong demand for BEVs, the French government announced a temporary halt to its EV subsidised lease programme last month and will resume it again in the new year due to its success.
“In NFDA’s Spring Budget submission, NFDA had urged the government to introduce incentives to prevent EV sales from flatlining. Noticeably, fleet has been driving sales of new cars rather than private buyers. The Government must do more to help maintain momentum in the private BEV market and increase adoption of these cleaner vehicles across the UK.”
APPRENTICESHIP LEVY
There was no mention surrounding the Apprenticeship Levy or wider apprenticeship reform in the Spring Budget.
Sue Robinson: “It is concerning that once again the Chancellor has failed to fix the existing, unworkable Apprenticeship Levy in this latest fiscal event. The motor retail sector experienced its highest vacancy rate in 2023. The sector currently is grappling with an intensifying skills shortage, which a reform of the Apprenticeship Levy could help alleviate. NFDA has consistently called for the Government to remove the claw-back cap and simplify the Apprenticeship Levy application process to enhance the utilisation of the capital locked into the levy. This will in turn assist dealers looking to recruit the next generation of apprentices.”
Sue Robinson concluded: “There certainly were a few missed opportunities in this Spring Budget, namely providing incentives for prospective EV buyers and addressing wider employment concerns within the industry. By creating the right trading conditions, it will facilitate investment, thereby catalysing growth across the country and the wider economy.
