8:33 am, May 27, 2020
France has unveiled a huge incentive package to boost car sales in the country – a move that will intensify calls for a similar scheme here in the UK.
With car dealers going back to work on June 1, calls for a scrappage scheme in the UK are growing from the industry, with many believing it’s not a case of if one is introduced, but when.
Yesterday President Emmanuel Macron announced a €7.1bn plan to revive the French motor industry that has seen sales tumble and production halted.
The scheme will see buyers of electric and hybrid cars given extra subsidies and funds for hydrogen power and self driving research in a plan designed to ‘relocalise’ car manufacturing in France.
The scheme aims to shift the unsold cars produced recently – expected to total 500,000 – and will see buyers of an electric car given €12,000 off the purchase price.
The plan includes a €5bn package of support for Renault too.
In the UK, car manufacturers and dealers have collaborated to send recommendations to the government on what a scheme to boost demand could look like here.
The ideas are being funnelled into the government via trade bodies, but support for the UK industry on a similar level to that seen in France still isn’t certain.
The government is facing pressure from across industries for support for different areas of the economy so a begging hand from automotive is likely to be joined by many others.
Alison Jones, PSA Groupe MD, and Jaguar Land Rover boss Rawdon Glover have both told Car Dealer Magazine they believe a scrappage scheme, or similar stimulus package to boost new car demand, is needed.
The thought is one could be introduced in July so it ties in with Q3 targets and the September plate change.
But the problem – as Jones identified in an interview with Car Dealer, a clip of which you can see below – is that the more a scheme is talked about the higher the chance those buyers not so desperate for a new car hold off until one is announced.
She said: ‘The first of July was a suggestion and is linked to the September car market, but what I would say is that any decision needs to be made sooner rather than later, because if customers think there is a stimulus package coming then that won’t help us in getting the industry started.’
With dealers heading back to work on Monday, the questions from consumers as to whether a scheme is coming will start flooding in – and with deals needed to be done now, any reason for customers to put off a purchase will be unwelcome.
Some car manufacturers in the UK simply don’t want to talk about a stimulus package at all. Car Dealer contacted all car firms in the Uk and only a handful replied.
A spokesman for Skoda said: ‘Clearly the car market is facing a very challenging period. If there are appropriate policy responses, experience shows there is an advantage in talking to the government with one voice.’
Paul Hendy, CEO of the near £1bn turnover Hendy Group, said he thinks a UK scheme should be based on incentivising customers to buy more eco-friendly models.
He said he’d like to see a scheme introduced as early as next week and run until the end of 2021.
He added: ‘I think it should be based on CO2 emissions and target cars aged over six years which should be crushed and taken off the road.’
While a scrappage scheme is controversial – many hate the idea of taking perfectly good cars off the road to replace them with another – the SMMT has called for a stimulus package of some form to be introduced.
However, behind closed doors, the biggest concerns are with the timing of a scheme.
One car maker told us: ‘It’s about when you pull the trigger to have the biggest impact on sales – we need to ensure it’s done at the right time.’
Car manufacturers and dealers are working hard themselves to devise marketing offers that attract customers into socially-distanced showrooms – but nothing works quite like a government-backed scheme.
SMMT chief executive Mike Hawes said: ‘A strong new car market supports a healthy economy and as Britain starts to plan for recovery, we need car retail to be in the vanguard.
‘Safely restarting this most critical sector and revitalising what will, inevitably, be subdued demand will be key to unlocking manufacturing and accelerating the UK’s economic regeneration.’
What Car? managing director Rachael Prasher said the last scrappage scheme came at a time when the market needed help – and it’s clear that now new car sales need all the help they can get.
She said: ‘Remember the 2009 scrappage scheme was introduced to boost a market that was down, not one that had completely stalled.
‘Yes, there is pent up demand, but the real risk of talk in the industry with no decisive action from the government is those consumers who can wait, will wait.
‘We see it in our data how they are already responding to delivery waiting times – add the “potential-maybe-prospect” of another scrappage scheme and the 31 per cent willing to delay now will only grow.
‘It really is time for decisive action to support one of the industries that matters the most to the wider health of the economy.’
Another issue will be what the scheme looks like – the detail about what cars it incentivises will be vital.
The good news is the government has clear ambitions on a drive to greener motoring and a scheme could be used to accelerate that. Add in the fact that the last scrappage scheme was self-funded thanks to the VAT receipts and it really makes no sense to not introduce one.
However, the incentive package will have to benefit all manufacturers. How does a scheme boost sales of electric vehicles but also benefit troubled branded like Jaguar Land Rover by incentivising buyers into a new Range Rover too?
While the latter might not meet a government plan to drive down emissions, it would help an embattled car maker that has reportedly gone cap in hand to the government for a £1bn bail out. You can see the problem, can’t you?
The mechanics of the scheme could cause the delay. Behind the scenes manufacturers have told us the SMMT is coordinating a proposal, but whether it will gain traction remains to be seen – and importantly will they all be able to agree a way forward?
‘We’re not the only industry in trouble,’ said one car manufacturer executive.
‘We have to hope that the car industry is seen as vital to the economy by those in power. It’s up to us to remind them as often as we can that that’s absolutely the case.’
Emissions-driven self-help scrappage scheme could help industry recover
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