Scrappage incentive scheme extended for another 100,000 vehicles

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.
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."