THE scrappage scheme announcement we all knew was coming is here – so what does the industry think?
There’s been a mixed reaction to the £2,000 scrappage scheme which must be matched by car markers – £1,000 from the government and £1,000 from carmakers.
There are worries that manufacturers just won’t be able to cut the cost of their cars to match the £1,000 on offer from the Treasury.
Here is what the major players in the industry have been saying:
Paul Everitt, SMMT chief executive
The Society of Motor Manufacturers and Traders (SMMT) has welcomed government’s introduction of a scrappage incentive scheme to kick-start demand in the car and van market The scheme, due to start in May 2009, will see government offer a £1,000 incentive to be matched by participating vehicle manufacturers when scrapping a taxed, insured and MOT’d car or van over 10 years old which they have owned for at least one year.
This is good news for consumers and will get people back into showrooms, kick-starting demand in the market. The scheme recognises the economic value of the motor industry and we are determined to make it a success. There is clearly a great deal to do and we look forward to discussing the finer detail of the proposal with government in the coming days.
Daksh Gupta, Marshall Motor Company CEO
I am delighted to see that the Government has responded to the growing demand for this sort of scheme, which will help many of our customers and all sectors of the industry. We are now working through the detail to see how this will work in practice, but we view it as an opportunity.
Neville Briggs, Pinewood managing director
If the new scrappage scheme proves as successful in boosting sales in the UK as similar initiatives have in other countries, then dealers are likely to see a sudden swing in the emphasis of their business away from used car sales and aftersales back to new car sales. They have a very short time to ensure that they have the best possible sales and marketing initiatives in place in order to maximise the opportunities that the scrappage scheme will present.
John Given, Manheim group sales director
We welcome any initiative that stimulates the new car market. The scrappage allowance could reduce our lower-value part exchange volumes coming into Manheim Auctions, but we do not believe this impact will be significant. However, any increased retail activity as result of this allowance will positively affect the marketing support provided to car dealers through Manheim Retail Services.
Tony Wilson, Chairman of Klarius Group
Making money available to stimulate the purchase of new cars in the UK is a false economy; it is a waste of public money, and contrary to recent positive coverage, did not benefit the German car industry when it was implemented there.
The UK has many hundreds of thousands of people employed in the automotive aftermarket industry. From roadside recovery, auto factors and distributors, to repair shops and fitting stations we have a major employment sector designated to the support of older vehicles.
The Institute of the Motor Industry (IMI) says:
There have been many arguments from across the sector for and against the introduction of a scrappage scheme, however we hope that today’s announcement by the Government will provide a boost to new car sales market and in turn have a positive impact across the automotive retail industry securing jobs and boosting consumer confidence in what is a dynamic sector of employment.
Prof Stephen Glaister, RAC Foundation director
Currently, the vast majority of cars are still on the road at 10 years old. Indeed, at 14 years old half are still on the road. The scrappage scheme announced today risks consigning a lot of perfectly good, and relatively clean, vehicles to the dustbin.
Whilst the announcement is good for motorists and the motor industry, if it does not encourage people to buy green vehicles it is a missed opportunity as far as the environment is concerned. However, if the scrappage scheme leads to a reduction in the average age of the national car fleet, then this has to be good for road safety, as more modern cars will have a wider range of safety features built-in.
Andrew Davis, Director of the Environmental Transport Association
It’s not just greenwash, it is hogwash. Many 10-year-old-cars have plenty of life left in them, so from a climate perspective, to scrap them is money poured down the drain.
Faye Sunderland, editor of TheGreencarWebsite.co.uk
Without setting a limit on the CO2 emissions of the new cars bought under this scheme, it makes a mockery out of the government’s said commitment to developing this country as a leader in green motoring. The scrappage incentive is now meaningless as it will not necessarily encourage the sale of greener cars. It is senseless to introduce the scheme in such a way.
Want to have your say? Post your comments below. It’s easy!
Hahahah, this is a real confusing message. Customers think they will get £2k from the Government, for buying a new car.
Then, they suddenly realise they have to have owned a 10-year old car for a year (which of these customers buy new cars, or are even in the market? 10-year-old-car owners are inevitably tending towards sub-prime. If they want a new car, who will finance it?).
Then, they realise the the manufacturer has to opt-in to the scheme. Errr, that’s Hyundai and Kia so far? Yay! Everone else is hammering calculators and seeing how much dealers will need to “share” the promotion costs.
Then… which manufacturer can give away a further £1k per car? So, sticker prices increase or discounts reduce to claw back the £1k… (or is that why so many price-rises already this year) and that is inevitably passed on to everyone NOT scrapping a car when they buy a new car (the vast majority of buyers subsidise this scheme and get penalised)….
…unless there is a two-tier new-car price system for scrappage or non-scrappage deals, and that will lead to claims of profiteering!
In total, the promoters of this scheme have created a real messy dog’s breakfast. Congratulations, car industry!!!
In addition, the detail still has be decided, so the BIG FREEZE with confused, expectant consumers waiting before they jump, continues. On and on. Oh, what fun everyone is having with such a mess.
Manufacturers must be solely disappointed they have been forced to go 50:50, I bet!! Shot in the foot!
(Luckily, my own customers, ABC 12 top-10% credit rated individuals, do not usually own 10-year old cars, thank goodness!) How this will affect used car dealers with 7-12 year old stock is anyone’s guess. Be worried.
The weak heads of the SMMT and RMIF should both resign for presiding over this fiasco. Another “announcement success” for Darling, looks good on the surface (he actually claimed he was giving £2k per car in his speech; disingenuous), but more confusion and reason to delay for the punter! Ridiculous.
(Apart from the fact that no one has suggested who actually pays the scrapping cost – the dealer? And the environmental costs described in the article comments, above.)
Ling Valentine
Most buyers in the UK change their cars every three to five years. There is a only a small percentage who buy a car and keep it for 10 years or more – and those that do would, in all likelihood, not buy a new car anyway.
The scheme could well fail at the first hurdle. What about the currently heaving scrap yards? A few months ago, I couldn’t get a local scrap yard to take a car I had, as they were full. Can you imagine car parks full of old scrappers waiting for room at the scrap yard? Testing times indeed.