The Sunday Times has reported despite concerns by the Treasury of the cost of such a scheme, Chancellor Alistair Darling is likely to give the plan the nod.
Business Secretary Lord Mandelson, the SMMT, RMIF as well as many sections of the media – Car Dealer Mag included – have been calling for a scrappage scheme to help boost flagging sales.
The plan is likely to offer motorists £2,000 to chop in their cars older than nine years for a greener model. The scheme is likely to extend to used cars up to 18 months old too – as long as they are under the CO2 cap set by the government.
The Sunday Times says ministers and officials are impressed by the impact of such schemes in other countries. Germany’s involves a £2,250 scrappage allowance and has reversed its slide in sales.
New car registrations in the country were UP by 40 per cent on a year ago last month while sales in Britain fell by 30 per cent.
The paper adds officials have been negotiating with the car industry about sharing the cost of the scrappage scheme and about ensuring that any allowance does not take the place of existing discounts by motor manufacturers, which would defeat the object.
‘A scrappage scheme will provide the incentive needed and the evidence is clear that schemes already implemented across Europe do work to increase demand,’ Paul Everitt, chief executive of the SMMT, told the paper.
‘The UK is the only major European market not to implement a scheme.’
While some eco-warriors oppose the scheme others are keen – including Friends of the Earth. The environmental group believes persuading motorists to swap ‘gas guzzlers’ for greener cars is a good thing.
Tell us what you think by posting your comments at the bottom of this story. You can read The Sunday Times story here.