A scrappage scheme to boost car sales is ‘unlikely’ say government ministers despite more trade bodies increasing calls for car industry support.
A scrappage scheme, similar to that put in place in France and Germany, was mooted to be planned to give car buyers up to £6,000 off a hybrid of electric car.
Rumours earlier this week suggested the chancellor Rishi Sunak and the prime minister Boris Johnson were set to announce one as soon as July.
Government sources briefed the Telegraph on Sunday that a scheme was being considered, but now reports have emerged in the Financial Times that one isn’t likely.
The paper has reported today that four senior officials have told the FT that although the Treasury has considered a scheme that would boost sales by incentivising buyers to scrap an older more polluting model, that is now skidding off course.
There has been no official word from the government on the scheme.
However, behind closed doors there are said to be worries a scrappage scheme would boost overseas manufacturers more than those at home which desperately need the help.
The last scrappage incentive in 2009 boosted demand for lower cost, small city cars and Korean manufacturers like Hyundai and Kia saw the most benefit.
With Nissan, Jaguar Land Rover, Toyota and Honda producing cars in the UK and struggling, officials are keen to introduce a package that helps across the industry.
Yesterday, the BVRLA and FLA urged ministers to develop a car scrappage scheme that tackles air quality and drives EV uptake.
In a joint letter to the Treasury, Department for Transport, and BEIS the two trade bodies called on a scheme to help boost the sector that was bold, quick and prioritised new and used EVs.
BVRLA Chief Executive Gerry Keaney said: ‘To be truly effective, any EV stimulus scheme must work for both the new and used market.
‘It should make the UK a more attractive market for OEMs to sell their EVs and help those who cannot afford to buy a new electric car to purchase or lease a used one. Any scheme that focuses solely on supporting new vehicle sales could damage the residual values of ex-fleet cars and thus hinder the sector’s ability to invest in new electric vehicles.’
While Adrian Dally, Head of Motor Finance at the FLA, added: ‘Getting Britain moving again will require many businesses and consumers driving newer and cleaner vehicles at prices they can afford. This stimulus will come at the right time to support jobs and households across the whole of the UK.’
Many others in the industry have called for a scheme.
Car Dealer Magazine was the first to report on calls for a new scrappage scheme to boost the industry back in mid-April.
Manufacturer bosses including Alison Jones, from PSA, and Rawdon Glover from Jaguar Land Rover, have both told Car Dealer a scheme is needed.
Speaking to Sky News earlier this week, Marshall CEO Daksh Gupta said: ‘We would welcome any stimulus for the sector, whether that be a scrappage scheme, grants or some form of VAT discounting. Stimulus is needed for the sector.’
Meanwhile, a report today from What Car? suggests nearly a third of car buyers are delaying buying in the hope a scheme will be introduced.
The poll of 6,632 in-market car buyers found that 29 per cent of them who were looking to buy their next car had decided to hold off in case some kind of incentive such as a scrappage scheme was announced by the government.
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