Emissions-driven self-help scrappage scheme could help industry recover

2:57 pm, April 30, 2020

International research and strategy organisation ICDP is calling for an emissions-driven scrappage scheme to help the automotive industry get back on its feet after the coronavirus pandemic.

Across Europe in March, new passenger car sales plummeted by 55 per cent and the figure is expected to be even worse for April.

But despite that, ICDP (International Car Distribution Programme) managing director Steve Young warned in an executive briefing that it was ‘unrealistic’ for the sector to expect special assistance, even though it had been so badly hit.

He outlined a self-help plan, as he said that without an intervention, any recovery was likely to be protracted and could lead to some businesses failing.

Some manufacturers may disappear too, as they’ve had to invest heavily to meet increasingly demanding emissions targets.

As such, the top 13 manufacturers are in line to be fined a total of €14.5bn (circa £12.6bn) in 2021, according to PA Consulting.

Young said: ‘It is therefore in the interests of politicians, regulators, industry players, consumers and society as a whole if an approach could be found which delivers a market stimulus for the automotive sector and achieves the emissions reductions embedded in the current regulation at the same time.

‘If this can be done without any requirement for public funds, leaving these to be diverted to other sectors in crisis, then this would be an added bonus.’

The ICDP is proposing an adapted scrappage scheme which it says would allow manufacturers to deliver the same air-quality improvement called for by the 2020/2021 carbon dioxide regulations, while reducing their obligation to do so through the sales mix for this year.

Young explained: ‘It does so by applying credits for higher-emitting vehicles scrapped against the potential fine that would be applied if the sales mix was non-compliant.

‘There is therefore no requirement for government support for scrappage, but there would be fiscal and economic benefits through higher tax revenues and protected employment.’

The ICDP says manufacturers could fund the scrappage allowance with money they’d have otherwise spent on less focused marketing initiatives, and at rates they believed would motivate buyers.

The European Commission could then let the manufacturer claim a CO2 credit for a scrapped car, which would support economic recovery.