As the £300m pot begins to run dry, Kia chief Michael Cole has told Car Dealer that he thinks the government must put more cash into the scheme.
‘I am genuinely worried about what happens after scrappage and am prepared to lobby quite hard on this,’ he told us.
‘If it does run out by the end of October, and it looks like it will, by the end of January at the latest all the scrap cars will be washed through and I think you’ll see all the positive news of car sales being up reversed.
‘I think we’d then get to March/April and we’ll see the industry in trouble again.’
Cole added that not only does he believe the scrap scheme is a good thing for the car industry – but for UK PLC as a whole.
‘As an economic driver that creates feel good factor in the market, car sales are important,’ he explained.
‘I am concerned that potentially we could see another downturn in the market. That’s why I think it should continue.’
But what if the government does pull the plug – are the Kia network worried about what happens next?
‘If it does come to an end the Kia franchise will be OK,’ Cole said confidently. ‘But clearly as we’re a big winner in the scrap market, if there is no scrap scheme our sales will be lower than they are now.
‘But we’re not worried – we’ve got new products coming. The new cee’d, the Sorento, that although not high volume has good profitability levels, and then there’s Venga (pictured).
‘If scrappage doesn’t continue we’ll have a challenging market, but we have new products to support it.’
Despite this, Cole predicts a year without scrappage in 2010 will see registrations fall again to around 1.7million units.
He added: ‘If scrappage goes, we will see a sales decline compared to what we’ve had in 2009. I would like to see the scheme continue – yes, because it’s benefitting us, but also because it is creating a feel good factor in the industry once again.’
EXCLUSIVE by James Baggott