Investigation: how the VAT rise affects bikes

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It’s tough times for the bike market, and the forthcoming VAT rise looks to be yet another unwelcome price rise. But how will it really affect prices in the showroom?

The rise from the current rate of 17.5% to 20% comes in to effect from January 1 2010, adding 2.5% of the pre-VAT rise cost to the price of every new bike sold in the UK.

For new 2011 models, it will mean an increase in the official list price of new bikes – dealers will be paying more to buy stock from manufacturers, and customers will be paying extra VAT on their purchases too.  

But it’s not quite as clear cut as that in the real world. MCN spoke to a leading Honda dealer about the implications – the effect is likely to be minimal, according to a spokeman for the dealer:

“We’re looking to absorb the VAT rise on our current stock of new bikes. We’ve already paid the ‘old’ VAT rate on bikes we have in now, and we’re intending not to increase the price in the new year.

“On used bikes it doesn’t make a difference – the only VAT paid on them is on our profit margin, and for the most part that’s only £20 or so, which isn’t worth us adding to the price of every bike.

“New stock in 2011 will be subject to the rise, and in an ideal scenario, we’d pass that increase on to the customer. But we’re not going to let it stand between us and a sale – if there’s a deal to be done, we’ll do it.”

If you’re looking at a new Ducati next year, you can also take advantage of the deferred payment scheme currently on offer in participating dealers. The offer allows you to buy a bike now at current pricing, but you won’t have to pay until next year. It’s available across the range, with finance at 14.9% APR. See a dealer for full details.

Chris Newbigging

By Chris Newbigging