‘In the Budget on 22 April the chancellor announced that the UK would follow many other EU member states and adopt a scrappage incentive scheme,’ says the SMMT.
‘The scheme will start on May 18 and will offer a £2,000 discount on a new car or light commercial vehicle (van up to 3.5 tonnes). Orders can be placed under the scheme until February 28 2010, or until the £300m government fund runs out.’
How will it work?
A customer can take their vehicle to a dealership and, as long as the following criteria are met, receive the discount off the price of a new car or van.
• The vehicle must have been first registered in the UK before 31 August 1999.
• The vehicle has been registered in the UK to the person making the claim and owning the new vehicle for the previous 12 months.
• The vehicle is fully MOT’d, taxed and insured.
• If the MOT has expired, it did so no longer than 14 days before the order was placed.
‘The scrappage scheme is good news for consumers and the UK motor industry alike. It has already started to get people back into showrooms to kick-start demand in the market,’ said Paul Everitt, SMMT chief executive.
‘There has been a good response to the scheme ahead of the official start date and industry is confident that this will be translated into additional orders.’
Will it have an impact?
Ahead of the official start of the scrappage incentive scheme industry has reported an increase in consumer enquiries through showrooms and website hits to dedicated scrappage pages. The following details some reports from manufacturers.
Citroën implemented a scrappage scheme in advance of the Budget announcement, which started on 1 April 2009. The scheme has seen a 15% increase in registrations in April due to the incentive.
Ford experienced the same number of hits on its scrappage web page within five days of the Budget announcement as it had previously had on its most popular page (new Ford Fiesta) throughout the whole of March.
Honda is seeing a significant level of interest – around 15% increase in sales enquiries from the initial announcement. Most enquiries are for Jazz – its smallest model but there is also a good spread across the range – including its British-built Civic and CR-V models.
‘Expressions of interest’ with dealers reserving cars are up more than 400% on normal. Some dealers are reporting more than that, and have already sold their entire 2009 allocation of some cars.
Renault has seen a 30-60% increase in showroom traffic and website hits are up 50%.
In the few days that “register your interest” was live on the Škoda website, it had over 1,000 people register as well as a good response to the web pages about the scrappage scheme offer.
A rural Suzuki dealer has reported a large increase in orders from a previous one new car per week to two per day currently.
Vauxhall scrappage web page has had close to 60,000 hits since the scheme was announced on April 22.
Which manufacturers have signed up?
All major vehicle manufacturers have indicated to SMMT that they are taking part in the scrappage scheme. This may change from the final list which will be announced by government. The following have indicated they will take part:
Abarth, Alfa Romeo, Audi, BMW, Chevrolet, Chrysler, Citroën, Daihatsu, Fiat, Fiat Professional, Ford, Honda, Hyundai, Isuzu, Jaguar Land Rover, Kia, Lexus, LTI, Mazda, Mercedes-Benz, MINI, Mitsubishi, Nissan, Renault, Peugeot, Proton, Porsche, Saab, SEAT, Škoda, smart, Subaru, Suzuki, Toyota, Vauxhall, Volkswagen and Volvo.
If a manufacturer hasn’t signed up initially, it can join the scheme with one month’s notice. Equally if a manufacturer wishes to leave the scheme, it must provide three months notice before opting out.
What happens next?
Once the dealer is satisfied that the old vehicle meets the criteria, the customer can place their order for the new vehicle and the government contribution is reserved. The manufacturer has four months to deliver the vehicle to the dealer.
Once the vehicle has been delivered, the dealer will send the old vehicle to be scrapped through an authorised treatment facility, which will do so in an environmentally responsible manner. If the vehicle takes longer than four months to be delivered to the dealer the funds are reallocated.
Government will place a unique code on each claim and will monitor the scheme through collating information via two spreadsheets. The first will have the details of the old vehicle being scrapped and the second has the details of the claim once the old vehicle has been scrapped; this will include the new vehicle details. It will carry out telephone audits during the scheme as well as a final audit two weeks after it ends.
Manufacturers will submit weekly reports detailing orders placed through the scheme and likely delivery dates. This will be used to monitor take-up and the remaining funds.
Once the transaction is completed the manufacturer will submit a payment claim to government – this will be done on a bi-monthly basis on the 1st and 15th of each month. If the claim meets all the requirements, the manufacturer will be paid within ten working days and the manufacturer will reimburse the dealer within a further ten working days.