UK car industry calls for new scrappage scheme

UK CAR industry bosses have called on the government to bring back a ‘scrappage scheme’ to cushion against Brexit uncertainties and help take ‘dirty diesels’ off the road.

Peugeot UK managing director David Peel (pictured) believes a scrappage scheme, which would give drivers of older cars a financial incentive to trade them in for a new model, is needed to halt sales nose diving next year.

At Car Dealer Magazine’s annual Automotive Influencers event, which brings together some of the biggest names in the UK car industry, Peel said: ‘I think the market is going to be very unpredictable next year. I think a scrappage programme would be a way of securing the position for 2017.

‘I can see the overall market declining next year, but I certainly feel that from experience of the last scrappage schemes, the cost to the Government is quite neutral, so I can’t see it’s a huge risk on their part to think of something in the vein of doing something similar next year.’

His comments were echoed by Kia UK president and CEO Paul Philpott, but with the proviso that any scrappage scheme introduced targeted older, high polluting diesel engine cars.

He said it would be a difficult argument to call for government support when car sales in 2016 are set to hit record levels, but it’s one that would have more sway if it were designed to clean up the UK car parc.

At the Car Dealer Magazine event, he said: ‘I think it’s far easier to rationalise the need for a scrappage scheme on diesel.

‘There’s been some calls for diesel scrappage schemes to get some of the older, more emitting diesel engines off the road, because, if you look at Euro-6 diesel engines, they emit a fraction of what a 10-year-old diesel car does.’

Andy Bruce, CEO of Lookers – one of the biggest car dealer groups in the UK which represents 31 manufacturers across 99 sites – said he would be ‘nervous’ about the perception a scrappage scheme would give to the wider public.

‘It can be a bad thing,’ he said. ‘I would be slightly nervous about the message it sent out in terms that there is a panic about to happen, because that’s what scrappage was brought in to address the last time.

‘But perhaps if it was around cleaner diesel engines, it wouldn’t be a bad thing. As long as it’s not pitched as being a panic measure.’

Ken Savage, chairman of dealer group Perrys, added: ‘I think if the Government were to introduce a scrappage scheme, perhaps on dirty diesels, that would be a good thing. The previous scrappage scheme worked well. It worked well for the dealers, for the manufacturers, for the general public and for the economy in terms of it was a stimulation.

‘The actual value of the contribution from the Government, in reality, was quite modest.’

The last scrappage scheme was introduced in 2009 and ran for 10 months. It saw the government incentivise owners of 10-year-old cars to trade them in for a new model with a £2,000 contribution, with half coming from the car manufacturer. The older cars were then destroyed by the government.

UK car industry bosses have called on government to introduce a new scrappage scheme – https://t.co/aYhVS4z8Xq – do you think it’s needed?

— Car Dealer Mag (@CarDealerMag) December 21, 2016

Car Dealer Magazine founder James Baggott said: ‘The last scrappage scheme was hailed as a huge success and came at a time the car market was in a desperate position, deep in recession. It actually worked out well for the government, with VAT receipts and registration fees thought to have easily covered its contribution.

‘Some 396,000 buyers took up the offer and it helped support the retail car industry at a time it desperately needed it. However, with 2016 looking set to be a record year, it’s hard to argue a small dip in sales caused by potential Brexit uncertainties is a good enough reason to reintroduce a scrappage scheme.

‘However, the current low-emission vehicle incentive schemes could be rethought to fiscally encourage owners to replace elderly, polluting diesel cars and vans with the latest clean models.’

The full report from Car Dealer Magazine’s Automotive Influencers event will be published in the next issue of the magazine, out on January 20.

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