Why scrap is RIGHT
September 29th, 2009 by Richard Aucock
SMMT chief Paul Everitt has exclusively spoken to Car Dealer Magazine, outlining why scrappage is right.
Extending it was the only thing to do, he says.
‘The scrappage incentive scheme has been an integral tool in helping to kick-start the UK motor industry. Until July 2009, the new car market endured 15 months of consecutive decline.’
But no sooner had it launched, than car sales recovered. ‘New car registrations saw an increase of 2.4 percent in July and 6 percent in August.’
The £100m extension ‘will help to sustain these early signs of recovery and stimulate demand for the UK market.’
It’s particularly well timed, because of next January’s expected VAT increase. It will ‘help counter the potential negative impact the return to a higher VAT rate could have.’
The whole industry has seen ‘encouraging’ side-effects from it – particularly car dealers. ‘Dealerships have seen a steady increase in interest both online and in dealerships…’ which is why car makers are having to up production, and why suppliers, sales channels and distributors are all working so hard.
It’s not even as if it’s costing the Government any money. ‘The self-funding nature of the scheme means that the revenue generated by sales offsets the costs.
‘For example, the 15 percent VAT paid on a car bought for £7650 would cover the cost of the £1000 Government contribution. It is the most cost-effective way for government to support this or any other sector.’
Thus, ‘SMMT fully supports the decision to extend the UK scrappage incentive scheme.’
Read the exclusive article from SMMT chief Paul Everitt IN FULL in the next issue of Car Dealer Magazine
OFFICIAL: Scrap scheme extended
Tags: new car scrap, scrappage, SMMT
September 30th, 2009 at 4:03 pm
Why does Paul Everitt say ‘extending the scheme was the only thing to do’? Surely anyone wanting to use the scheme would have done so by now. Car makers have already had £300m worth of taxpayers support and now they are getting a further £100m. I wonder what Lord Mandelson would have done when faced by the SMMT and others after the election. I am sure they would have got quite a different response. But we’ve got an election coming up and the Government needs every vote it can count on!
September 30th, 2009 at 5:42 pm
The key statistic, Steve, will be to find a way to split the number of sales totally due to scrappage from the buyers who would have bought anyway.
Using the example of a £7650 car above, the scrappage incentivised sales have a net cost of zero. The only cost will be the sales that would have happened anyway, who took advantage of a ‘windfall’
September 30th, 2009 at 5:59 pm
What happened to car registrations after scrappage was introduced could hardly be called a recovery. The figures are much lower than two years ago, and August’s registrations -we’ll see what happened in September soon – were 25 per cent scrappage. Introducing scrappage was introducing a second slump-in-waiting.
October 1st, 2009 at 11:29 am
I couldn’t agree more about a second slump-in-waiting. I think a lot of the people who have bought under the scheme would have done so anyway. They have simply brought the purchase forward adding to the air of ‘Robbing Peter to Pay for Paul’. I think the scheme has simply masked the fact that for a long time their has been oversupply in the marketplace and the downturn has jus amplified it.