REPORTS this weekend suggest a scrappage scheme WILL get the go ahead in the Budget on April 22.
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.
First, your “scrap” logo is disingenuous. It should represent a perfectly good 9-year old Fiesta with a few years of life left in it, not a mangled bodyshell.
I believe a large part of the massive downturn in new car sales this year has been caused by the hype and promotion of this scheme by people like you, and industry bodies such as the SMMT. No new car buyer in their right mind will commit to a new car purchase with the thought of a £2000 subsidy waiting in the wings. I get daily emails from customers asking about this “scheme”. Therefore, the SMMT and others are directly responsible for many lost new car sales up to now in 2009, something which should see heads roll at the top. And I have news for Paul Everitt; begging for subsidy for your foreign-owned members is NOT “slogging your guts out”.
The motor industry have created a self-inflicted vicious circle; This scrappage scheme is only said to be needed because the repeated talk and self-promotion of it has contributed to massively depressed new-car sales.
Not only that, but such a scrappage scheme in the UK will benefit 100% foreign-owned manufacturers, and will only impact a small number of domestically built “new greener” low-CO2 cars (Mini and Micra). All other taxpayer subsidy, if applied, will flow out of the UK. If The Times is correct and a scheme would be slanted towards “costlier models” (by their nature higher CO2 cars), how can that be touted as an environmental benefit?
In addition, perfectly roadworthy cars would be scrapped; a further environmental catastrophe. If older cars need to be scrapped, the MOT emissions should be tightened, that is a far more effective method.
If the manufacturers have been squeezed so much they have had to apply several price-rises, how can anyone suggest makers can afford a further £1000 industry half-half subsidy as in The Times article? Unless you take the cynical view that price-rises have been “positioning” moves ready to take advantage of such a scheme. Many new cars have RISEN in price by £1000 this year!
Why do “we as an industry deserve something” – as Paul Everitt is quoted as saying? We are only selling cars. These are discretionary consumer goods. Does the UK really have the taxpayer funds, appetite or desire to spend our tax money to support a foreign-owned industry?
Disturbingly, “Automotive Management” magazine forums have included suggestions by some people that stockpiling old cars and registering them in the names of friends and family is a smart move (to trade them in against new stock in exchange for subsidy). I suggest this scheme will expose corruption and bad practise in the motor trade on a large scale. How will the industry deal with future reports of “greedy” dealers manipulating a scrappage scheme for self-benefit?
It is all simply plain wrong, a terrible strategy, and Paul Everitt should resign for presiding over what many foreign manufacturers will regard as a windfall give-away scheme while the UK taxpayer subsidises them. It rewards bad management decisions and preserves uneconomic car manufacturing levels.
If the scrappage scheme goes ahead (I doubt it) this scheme will backfire on many levels. And don’t forget, there are many non-franchised used-car operations out there that will lose as a direct result of such a scheme. What about them? Manipulating the market is dangerous and has lots of unwanted effects.
Ling Valentine
LINGsCARS.com
There are various issues that I have not seen anybody pick up on with regard to the “Scrappage Scheme”.
On the Continent, there is a vertually non existant used car market. People tend to buy a new car and keep it until it dies or pass it down to Family & Friends.
We in the UK buy and sell around 7 Million used cars each year. With that in mind, what is going to happen to the 41,000 cars for sale on Autotrader alone for less than £2000?
By introducing the “Scrappage Scheme”, a whole industry could be wiped out! What about the repairers of the older cars. What’s going to happen to them?
And what about the good cars that we currently take in part exchange? I had a Customer in the other day with a 1998 VW polo they have owned from new done 50K with full VW service history. There would be more harm done to the environment by scrapping this car rather than keeping it on the road.
It doesn’t make sense and they have not thought through all the consequesnses.
Danny Jay
Manor Hill Cars Ltd