7:03 am, March 25, 2009
READ SMMT chief executive Paul Everitt’s thoughts on why a scrappage scheme is right for the UK…
THESE are tough times for everyone, but the motor industry is unquestionably experiencing the most dramatic impact of the downturn in demand and lack of consumer confidence.
The SMMT forecasts that 1.72m new cars and 207,000 light commercial vehicles will be registered in 2009. This is 20 per cent down on 2008 levels and more than 700,000 units less than in 2007.
There is little wonder then that SMMT, alongside colleagues at the RMIF and FLA, has been calling for government assistance to help stimulate demand for new vehicles by ensuring access to more and better priced finance, and through the introduction of a targeted and time limited scrappage incentive scheme.
Similar schemes are already running in many of the major European markets with the scheme in Germany having the most direct and encouraging impact.
In February, the first full month of the scheme, registrations rose by 21.5 per cent and resulted in a number of vehicle manufacturers reversing planned cutbacks. This compares to a further fall in registrations in the UK.
A sustained and co-ordinated effort across the major European markets is the most effective way of generating consumer confidence and demand.
A UK scrappage scheme would bring much needed relief to the motor industry and all the businesses that rely on it. Such a scheme will also deliver significant environmental benefits.
In the last year, CO2 emissions from new cars in the UK fell at their fastest ever rate. New vehicles are cleaner, safer and more fuel-efficient.
There are concerns that a scrappage scheme might benefit foreign factories. There is no doubt in an integrated European market that demand in one economy will create benefits elsewhere.
The UK exports 75 per cent of the vehicles made here and a large proportion of the three million engines we produce go into cars made in other EU states. Demand stimulated by a scrappage scheme will help sustain jobs in all parts of our industry: design, development, manufacture and retail.
The motor industry in the UK, Europe and around the world faces unprecedented challenges.
More effort and resource from government are needed to help sustain jobs and capability. The motor industry is an engine of economic and social development and will, in time, repay investment in it many times over.
Paul Everitt, SMMT chief executive
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