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Scrappage incentive scheme extended for another 100,000 vehicles
publication date: Sep 29, 2009
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author/source: Robin Roberts
The
Government will add a £100M to the vehicle scrappage scheme to
build on the success of the scheme in boosting consumer demand.
The
automotive sector supports R&D, technological innovation and skills and a
manufacturing supply chain that are a mainstay of the wider manufacturing
sector in the UK. Car makers have individually welcomed the extra funding.
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So far
227,750 orders have been placed through the scheme.
The increased funding enables
the scheme to fund a further 100,000 vehicles, bringing total budget to £400
million and covering up to 400,000 vehicles in total.
The extension continues
as a Government and manufacturer partnership, with matched funding providing
the £2,000 discount for each scrappage order.
Alongside
the increased funding the Government will work with manufacturers to extend the
benefits to van owners with vehicles over 8 years old rather than the current
10 year requirement.
Car owners will also get a boost, with the age
qualification changed by 6 months to extend the benefits to cars registered on
or before 29 Feb 2000 (V registration).
The scheme will come to an end in
February 2010 or when the funding runs out, which ever is sooner.
| | Industry figures have reflected the positive impacts of the
scheme both within and beyond the automotive sector, with manufacturing
benefitting and the whole supply chain, from plastics and steel, to individual
component manufacturers receiving a boost.
Commenting on the Department for Business
Innovation and Skills' announcement of an extension to the vehicle scrappage
scheme, SMMT chief executive Paul Everitt said,
"Lord Mandelson's announcement of an extension to
the car scrappage scheme is an extremely important decision that will inspire
consumer and business confidence.
"It will help to stimulate demand, giving more
consumers access to it, and create a bridge to a period when economic growth is
strengthened and more sustainable.
"The additional 100,000 vehicles should help to
counter the likely negative impacts of a return to the higher rate of VAT and
the introduction of first year VED rates."
Business
Secretary Lord Mandelson said, "The sector has been strongly affected by the
recession, but the scrappage scheme has delivered a boost to manufacturers and
the supply chain.
"We have listened to the concerns of manufacturers and are
increasing the funding of the scheme to £400m.
"But we
must make sure that the help we do offer is targeted, limited and
proportionate. This is not a blank cheque to the auto manufacturers but
recognition that there is still a short term challenge to boost demand and
confidence in the sector." | | | | |
Because
of additional funding by the Government and manufacturers, the Scheme will now
cover up to 400,000 transactions. It will still come to an end on 28 th
February 2010 or when the funding runs out, whichever is sooner.
To ensure
all 10 year old cars will qualify for the scheme, the date by which vehicles
must have been registered in the UK to qualify for the scheme will be changed
to 28 February 2000 (V registration) except in the case of vans where the date
will be changed to 28 February 2002 (Y registration or earlier, or new style
number plates where the 3rd and 4th digits of the registration number are 51)
Government
will work with manufacturers to implement these changes, and these will come
into effect as soon as possible.
The
Government scrappage subsidy is matched by equal funding from manufacturers.
Commenting on the extension to the scrappage scheme
announced by Lord Mandelson today, Finance & Leasing Association Head of
Motor Finance, Paul Harrison, said,"The extension to the scrappage scheme will
be widely welcomed in the motor industry. The Government is also in talks in
Brussels on additional support for the motor finance sector. We need Lord
Mandelson to get a good result there, so that demand for new cars can continue
to be met in the future when the economy recovers." |
Marc Summers, auto director at KPMG, welcomed the extension
to the car scrappage scheme, saying, " The
announcement by Business Secretary Lord Mandelson to continue with the
scrappage scheme in the UK will be a welcome boost to the automotive industry
as a whole and will increase short-term confidence by delaying and minimising
the uncertainty over future car volumes.
"OEMs and suppliers here will continue to benefit
from the scrappage scheme until the automotive industry can firmly stand on
its own feet again. The asymmetric benefit of the scrappage scheme
has meant that OEMs with small-eco cars have benefitted and those who have been
successful will be hoping that the long-term benefit of the scrappage
scheme will produce a new generation of customers who are brand loyal for
many years.
"In the meantime, it will take several years
for new car sales to return to something approaching pre-credit crunch levels.
What the auto industry needs is a steady injection of support
through government schemes which will allow it to stabilise and pick up
momentum."
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