Scrappage scheme needed to boost vehicle market demand

The Society of Motor Manufacturers and Traders (SMMT) reiterated its call for a scrappage incentive scheme to boost the new vehicle market at a European seminar held in Brussels today (16 February 2009). Initiated by the European Commission, member state representatives discussed how scrappage schemes are designed to work in each country and how these schemes could be harmonised across the EU to maximise benefits to industry and consumers alike.

SMMT submitted a proposal on a UK scrappage incentive scheme to Lord Mandelson’s Department for Business, Enterprise and Regulatory Reform (BERR) in early February and has urged government to implement it as soon as possible. The scheme would allow both cars and light commercial vehicles (vans) over nine years old to be scrapped in return for a £2,000 cash incentive towards a new or nearly new vehicle. Similar schemes adopted in Germany, France and Italy have proved successful, significantly boosting the market and reducing CO2 emissions by taking some of the older vehicles off the road.

“Urgent action is needed to get consumers back into the showrooms and boost demand in the market. It is vital that car buyers are given the confidence to buy now and a scrappage incentive scheme is a clear signal which has already proved successful in other EU member states,” said Paul Everitt, SMMT chief executive. “The UK government must align with Europe and take immediate action to protect its automotive sector.”

It has been estimated that schemes recently introduced in Germany and France are likely to generate some 200,000 to 400,000 replacements. Given the relative size of the UK market, SMMT estimates that up to 250,000 cars and 30,000 LCVs could go through the scheme over an 18 month period.