Paul C

The Scrappage Scheme

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See https://cardealermagazine.co.uk/publish/is-new-scrappage-scheme-coming-in-2020/192471

On first reading, it makes sense......but then, its only really the view of ICDP (International Car Distribution Programme). Of course, car manufacturers will like it, because its basically targeted free money which helps them get closer towards their 95g/km target which it looks like they'll miss - badly - and face a bunch of huge fines for.

Manufacturers and new car dealers can do what they like to sell/promote the cars they want to, but at the end of the day its the actual Government, not them, who are going to set the parameters of a scheme (if any materialises). And.....the government are a bit busy with other stuff. Its well known that the car industry as a whole is important but somewhat oversized, does it really help to just throw money their way, long term, anyway?

I think the general public will be as keen as ever to be pro-environmental in years to come after CV19, having had a taste of what its like during the reduced economic and transport activity. But the obvious way to achieve that is to greatly reduce the amount of those polluting activities and do something else. The mindset has changed, where before there was a "need" to travel, that might be a bit diluted now too? So the desire for eg electric cars is kinda the same (they balance out), not bolstered by this crisis.

Is it so great to continue propping up the car industry? Who loses out if the scrappage scheme is introduced? Does it really benefit consumers and the environment?

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I don't think government will be keen in the short term to introduce incentives towards new cars, they are well aware that the manufacturers have an ace up their sleeve in the form of that age old secret - how much does the manufacturer make per unit... it's well known the franchisee has circa 10-20% margin which they can choose to give away, but the factory margin has always been a mystery, and with the current trend to build many group models off the same chassis / platform the margin is rumoured to be as much as 50-60% on some models, so as you can imagine there is plenty of scope for the new car industry to give itself a good push, and then there is the issue of manufacturers not wanting to loose presence / franchisee's in most area's, 

we will likely see an inevitable reduction in franchise's as some already had the wobbles pre covid, and the industry was already re-sizing with remaining franchisee's being given more catchment area, i would expect to see new car incentives by the manufacturer sooner rather than later and possibly backed by factory 0% finance.

who's going to loose? i would imagine the car supermarkets are currently bricking it, they don't have much else to give away in the way of incentives, and the mid year final FCA rules review is due any day soon which is likely to cap finance commission, the business model of deal profit rather than chassis profit linked to multi sub prime lenders coupled to large site overheads may well be about to go tits up, that would be good news for most on here...

 

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I think it will be hard in the current circumstances to see the government launching a new scrappage scheme, we have huge problems growing within the economy, consumer confidence is at an all time low, the potential for massive increases in the level of unemployment, and the retired (with ££££) under house arrest, to name just a few of the likely issues. Who is going to be buying the cars?

Its true that some of the car manufacturers have had very high factory gate profits but most have continually increased their costs on the back of these large profits. The perfect example is JLR they had one of the highest factory gate profits in the industry - making av £20k+ for every car that left the factory gate but they used this profit to increase their head count/spending substantially. They had already tried to rectify this in Jan 2020 when the CEO stood down and they announced £1.1bn in spending cuts, things will have got a whole lot worse for them since. I think the manufacturers will have a very hard time and we will likely see further consolidation and cost cutting at a time when they will be massive pressure on them to prop up their dealer networks.

The franchise dealer network is going to really struggle, the franchise model hasn’t worked for years and was one of the main reasons I got out of it. I do feel for some of the smaller family dealer groups who have been finding it more difficult to trade successful over recent years and for many it’s likely to be the final nail in their coffin.

I’m sure the car supermarkets will survive on the back of buying some very cheap cars from rental firms, ex demo’s and nearly new cars repossessed from franchise dealers and manufacturers directly.

I wouldn’t swap my used car business for any of the above! 

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we should have a vat reduction to stimulate the savings to be spent, many have got after furlough

not everyone is spending beyond their means 

this will put money back into the economy

help manufacturing (one Hope's in the uk)

and hopefully create jobs

another scrappage scheme just takes good cars to be smashed away from the very people who need them, the working class of britain of whom there are many,obviously they dont like this title but hey ho

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If the government (can afford to) provide an economic stimulus in the future, I think it will either be in the form of specific help for certain sectors - for example airlines, pubs/restaurants, performing arts. The car industry is somewhat lower down on the list and is expected to "get on with it themselves". And/or, a VAT drop to 15% or thereabouts to provide a more general stimulus.

Worrying times ahead for franchises, I feel. I think auctions are going to undergo something of a revolution too but I'm not sure quite how it would end up.

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39 minutes ago, Paul C said:

 I think auctions are going to undergo something of a revolution too but I'm not sure quite how it would end up.

I put a link up the other night

I will pm you it as no one else seemed interested:) if I can find it

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Posted (edited)
1 hour ago, Paul C said:

I think auctions are going to undergo something of a revolution too but I'm not sure quite how it would end up.

I think the trouble is is they don’t know either.

4 hours ago, awc1000 said:

but the factory margin has always been a mystery, and with the current trend to build many group models off the same chassis / platform the margin is rumoured to be as much as 50-60% on some models,

The steady rise in list prices over the last decade, fuelled by everything bought on tick, must net the manufacturers a good percentage. (And stone me, I think Peugeot are still using 15yr old 206 radios & window switches in their current cars - minimal development ). Tbh many new bread & butter cars are clearly built down to a tinpot price.
 

1 hour ago, New year revolutions...... said:

help manufacturing (one Hope's in the uk)

Perhaps a stimulus strictly on UK built stock. Even more radical, perhaps adding a duty on all Panzerwagens.

6 hours ago, Paul C said:

And.....the government are a bit busy with other stuff. Its well known that the car industry as a whole is important but somewhat oversized, does it really help to just throw money their way, long term, anyway?

Should some of it not go the same way as coal mines, Woolworths & the rag trade?

 

3 hours ago, Bmx Bandits said:

I do feel for some of the smaller family dealer groups who have been finding it more difficult to trade successful over recent years and for many it’s likely to be the final nail in their coffin.

Ford, and others, already have their hammers & nails at the ready.

Edited by BHM

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1 hour ago, BHM said:

I think the trouble is is they don’t know either.

The steady rise in list prices over the last decade, fuelled by everything bought on tick, must net the manufacturers a good percentage. (And stone me, I think Peugeot are still using 15yr old 206 radios & window switches in their current cars - minimal development ). Tbh many new bread & butter cars are clearly built down to a tinpot price.
 

Perhaps a stimulus strictly on UK built stock. Even more radical, perhaps adding a duty on all Panzerwagens.

Should some of it not go the same way as coal mines, Woolworths & the rag trade?

 

Ford, and others, already have their hammers & nails at the ready.

Peugeot in particular find some parts in the parts bin stick them all on a car and call it a special edition . They did it with some parts on the 207 sw models and some of the older 205 306 models etc one of the mechanics used to joke that they must have found some parts in a cupboard some where 

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Posted (edited)
18 hours ago, New year revolutions...... said:

 

we should have a vat reduction to stimulate the savings to be spent, many have got after furlough

not everyone is spending beyond their means 

this will put money back into the economy

help manufacturing (one Hope's in the uk)

and hopefully create jobs

another scrappage scheme just takes good cars to be smashed away from the very people who need them, the working class of britain of whom there are many,obviously they dont like this title but hey ho

 

Edited by Anglo9
Agree with this

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Only vaguely related, and I can't decide if the message is "we don't care about car owners" or "get in your car but not in London" but this: https://cardealermagazine.co.uk/publish/mike-brewer-dont-penalise-motorist/192638 is a good illustration of how the government aren't suddenly going do to any U-turns resulting in a flood of consumers back into their cars. 

I'm a little undecided if Mike is the best ambassador for our industry either. I've kinda never forgiven him after he did that terrible botched Golf GTI renovation on Wheeler Dealers and stuck the side stripes on upside-down!

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I think it goes to show how deep the problems are within the economy.

Go to work, get the county going but don’t use public transport, we’ll then have to tax car drivers harder to keep public transport alive, as in the future we’ll be telling you all to ditch the car and use public transport again.

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1 hour ago, Paul C said:

Only vaguely related, and I can't decide if the message is "we don't care about car owners" or "get in your car but not in London" but this: https://cardealermagazine.co.uk/publish/mike-brewer-dont-penalise-motorist/192638 is a good illustration of how the government aren't suddenly going do to any U-turns resulting in a flood of consumers back into their cars. 

I'm a little undecided if Mike is the best ambassador for our industry either. I've kinda never forgiven him after he did that terrible botched Golf GTI renovation on Wheeler Dealers and stuck the side stripes on upside-down!

Paul, If you are refering to the congestion charge being brought back in London, that isn't going to be anything that the Government have decided.

 

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Posted (edited)
12 minutes ago, Boycie said:

Paul, If you are refering to the congestion charge being brought back in London, that isn't going to be anything that the Government have decided.

 

From the BBC News Website yesterday, “The congestion charge for people driving into central London will be reintroduced on Monday under the terms of a £1.6bn government bailout.

It follows a deal in which Transport for London (TfL) secured emergency funding to keep Tube and bus services going until September.

From 22 June, the congestion charge will also rise from £11.50 to £15.

Downing Street defended the changes saying it "only applied to a small area of central London".”:)

 

Edited by Bmx Bandits

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16 hours ago, Bmx Bandits said:

From the BBC News Website yesterday, “The congestion charge for people driving into central London will be reintroduced on Monday under the terms of a £1.6bn government bailout.

It follows a deal in which Transport for London (TfL) secured emergency funding to keep Tube and bus services going until September.

From 22 June, the congestion charge will also rise from £11.50 to £15.

Downing Street defended the changes saying it "only applied to a small area of central London".”:)

 

Transport For London is not run by the Government.

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5 minutes ago, New year revolutions...... said:

and?

I see a question mark, but no question.

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12 hours ago, Boycie said:

I see a question mark, but no question.

TfL is a puppet agency of the government. It is free to do what it wants, but it only gets government funds if it does what the government wants. Hence it only got the £1.6bn bailout by agreeing to the Congestion Charge changes.

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Posted (edited)

when you help one dealer with a scheme [scrappage] you remove supply from another, it is well documented that many good cars with plenty of life left [ and classics] were needlessly crushed, remember these cars could not be resold, that was the rule.

bear in mind that the used car dealer, not only looses the opportunity to purchase a so called "scrap" car, he also looses a used car customer to one who reckons he may as well buy new.

i take you back to the original scrappage scheme, hyundai i10 was £7000 base out the door, put your old car in and it was £4995, for a brand new long warranted car, £2000 scrappage if you remember [ correct me if my figures are wrong ] !

everything has a cost, and someone has to pay, and introducing a scrappage scheme is not helping the whole "car dealers".

Edited by have a word with the wife

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40 minutes ago, have a word with the wife said:

when you help one dealer with a scheme [scrappage] you remove supply from another, it is well documented that many good cars with plenty of life left [ and classics] were needlessly crushed, remember these cars could not be resold, that was the rule.

bear in mind that the used car dealer, not only looses the opportunity to purchase a so called "scrap" car, he also looses a used car customer to one who reckons he may as well buy new.

i take you back to the original scrappage scheme, hyundai i10 was £7000 base out the door, put your old car in and it was £4995, for a brand new long warranted car, £2000 scrappage if you remember [ correct me if my figures are wrong ] !

everything has a cost, and someone has to pay, and introducing a scrappage scheme is not helping the whole "car dealers".

It's not the problem you think it is, nor was it last time round, granted some gems were lost in the last scrappage scheme but the bulk of the swappers were tat, exactly how it was intended.

the only loss to the franchises were the sales managers who lost their bung money off the banger traders, it was 2k gov contribution and 1k from the manufacturer, the gov money only appearing after confirmation off collection by an appointed scrap dealer, hence nothing could go missing.

the only loss to the used car trade was the lads selling and relying on sub £1k shite, and they were not that bothered anyway as the supply of that stuff is constant anyway.

if the scheme comes back it will be good news for franchises ,and good news for proper used car dealers selling decent £2-3k cars who have it hard competing with cowboys selling un-prepped sub £1500 junk.

as for the lost gems, well last time they really were few and far between, it certainly wasn't the great mint older car cull that people imagined or presumed happened, the only shock was how many folks with £200 cars who were in the market for a new motor.....

if you are worried about another scheme and your stock profile is all sub £1k sold as seen tat then you are either a busy fool or need to find a new career.

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Posted (edited)
11 minutes ago, awc1000 said:

It's not the problem you think it is, nor was it last time round, granted some gems were lost in the last scrappage scheme but the bulk of the swappers were tat, exactly how it was intended.

the only loss to the franchises were the sales managers who lost their bung money off the banger traders, it was 2k gov contribution and 1k from the manufacturer, the gov money only appearing after confirmation off collection by an appointed scrap dealer, hence nothing could go missing.

the only loss to the used car trade was the lads selling and relying on sub £1k shite, and they were not that bothered anyway as the supply of that stuff is constant anyway.

if the scheme comes back it will be good news for franchises ,and good news for proper used car dealers selling decent £2-3k cars who have it hard competing with cowboys selling un-prepped sub £1500 junk.

as for the lost gems, well last time they really were few and far between, it certainly wasn't the great mint older car cull that people imagined or presumed happened, the only shock was how many folks with £200 cars who were in the market for a new motor.....

if you are worried about another scheme and your stock profile is all sub £1k sold as seen tat then you are either a busy fool or need to find a new career.

absolute garbage

and I'm not talking about the scrapped cars

there were mint cars of every make,service histories to choke a donkey on,often just serviced too,  these cars mainly came from retirees who decided to scrap cars to buy a new one as their last cars

you told me you buy cars on assignment so I can only guess the dealers you deal with are not kia hyundai and ford sellers

 

Edited by New year revolutions......

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4 minutes ago, New year revolutions...... said:

absolute garbage

 

I wouldn't expect an idiot to understand it, especially one who wasn't even in the job during the last scrappage scheme.

sounds like your still in a mood because your sole source of stock is still closed.

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11 minutes ago, New year revolutions...... said:

absolute garbage

and I'm not talking about the scrapped cars

there were mint cars of every make,service histories to choke a donkey on,often just serviced too,  these cars mainly came from retirees who decided to scrap cars to buy a new one as their last cars

you told me you buy cars on assignment so I can only guess the dealers you deal with are not kia hyundai and ford sellers

 

try asking what my thoughts are based on rather than presuming all the time, i currently underwrite for most franchises as a trade buyer and have done for 30+ years, i also sell late stock to franchises, i was well aware of what profile the last scrappage scheme cars were as i was there to see it with my own eyes, yes some gems got lost but in the scheme of things they were few and far between,

your strange exact profilling of the type of customer who took up the scheme is laughable, an opinion obviously formed by reading historic articles and listening to bullshit whilst standing at the block,

one things for sure - you were not walking in and out of franchises in 2009 on a daily basis to see what actually happened, unlike myself.

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11 minutes ago, awc1000 said:

try asking what my thoughts are based on rather than presuming all the time, i currently underwrite for most franchises as a trade buyer and have done for 30+ years, i also sell late stock to franchises, i was well aware of what profile the last scrappage scheme cars were as i was there to see it with my own eyes, yes some gems got lost but in the scheme of things they were few and far between,

your strange exact profilling of the type of customer who took up the scheme is laughable, an opinion obviously formed by reading historic articles and listening to bullshit whilst standing at the block,

one things for sure - you were not walking in and out of franchises in 2009 on a daily basis to see what actually happened, unlike myself.

well actually I was

28 minutes ago, awc1000 said:

I wouldn't expect an idiot to understand it, especially one who wasn't even in the job during the last scrappage scheme.

sounds like your still in a mood because your sole source of stock is still closed.

you obviously do not know me

let me put it this way ,when I first started buying at the auctions the first auctioneer I bought off has now been dead 35 years+

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On 5/18/2020 at 12:14 AM, Halfpenny said:

TfL is a puppet agency of the government. It is free to do what it wants, but it only gets government funds if it does what the government wants. Hence it only got the £1.6bn bailout by agreeing to the Congestion Charge changes.

So just to clear it up, it was only able to bring in the Congestion Charge, which would gain it revenue, by getting Government funding? That makes sense.

 

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3 minutes ago, New year revolutions...... said:

well actually I was

unlikely, or in that case it makes your assumption on the type of customers even more ridiculous, 

i'll quote you - every make:D mainly from retirees:D buying their last car:D, that type of customer did not even amount to 5%, your starting to embarrass yourself.

any idea what the franchises opinion on the latest banded around scheme is? i would be interested to know your thoughts on it and how you know, if it makes sense i'll even give you my thoughts - based on being in daily contact with many franchises up and down the country.

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