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Scrappage scheme has just days to run say experts
publication date: Sep 28, 2009
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author/source: Robin Roberts
The scrappage incentive scheme has had a positive impact on car production with one in three cars built in the UK last month for the home market and total volumes starting to stabilise, said SMMT chief executive, Paul Everitt. "However, underlying demand remains weak and the recovery is still extremely fragile. A continuation of the scrappage incentive scheme through to the original close date of 28 February 2010 would help to sustain growth and bridge uncertainties associated with the ending of VAT discount." "The continued fall in commercial vehicle output reflects ongoing weakness in the market," said Paul Everitt, SMMT chief executive. "Specific action is needed to address business confidence and encourage investment in new business vehicles." The UK Scrappage scheme could run out of funds this week. David Raistrick, UK Manufacturing Leader at Deloitte said it needs to be extended to stabilise industry. "As it looks increasingly likely that the scrappage scheme will end next week, declining car production figures for August highlight the importance of an extension to the scheme. "This is the wrong time for the industry to lose the support of scrappage which has without doubt boosted car registration figures and helped production figures. To avoid consumer confusion any extension needs to be announced in the next week or two. "An extension to June 2010 or a further contribution of £300m from the Government would help to further stabilise the automotive sector which is recovering gradually. Further support from scrappage will stimulate demand for new cars which will improve the industry's chances of a more long-lasting recovery. "The scheme has also encouraged consumers to purchase smaller, more environmentally friendly cars and has been good for the entire automotive industry. Given how the scheme has been set up, the Government is able to fully recover their contribution through additional VAT and other tax revenues raised." |
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