An extra month has been added to the deadline for the
Government Scrappage Scheme, allowing manufacturers and dealers more
time to prepare for and operate the exit phase of the scheme. This change was announced by Government yesterday
following requests from car manufacturers for more time to prepare
dealers and inform consumers.
Previously due to complete in February, the Scheme, which is jointly
run by the Government and car manufacturers, will now run until the end
of March or until the money runs out, whichever is the sooner.
Business Secretary Lord Mandelson said, “Against the background of the
economic downturn the Scrappage Scheme has proved a great success,
driving UK car sales, protecting jobs and supporting the supply chain
for car manufacture at a time when this sector needed it most.”
The announcement was made as the SMMT revealed car registrations rose
by 29.8pc in January to 145,479 units. It is the seventh month in a row
sales have improved from a disastrous preceeding 12 months.
The SMMT says scrappage sales accounted for just under 18pc of the sales.
With the higher VAT now imposed and sales brought forward as scrappage
ends, the industry expects the registrations for 2010 to be about 9pc
lower and finish at 1.82 million new cars. “The 29.8pc increase in January new car registrations provides a better
than expected start to 2010 for the UK motor industry,” said Paul
Everitt, SMMT chief executive.
“Scrappage continues to lift demand successfully and today’s
announcement of a continuation of the scheme to the end of March will
allow the maximum number of people to benefit from the budget that’s
still available. “Industry expects another difficult year with the availability of
finance, consumer confidence and sustaining demand post-scrappage, key
to performance in the second half of the year, but signs of recovery in
the fleet and business sectors are encouraging,” he concluded.
VAN AND LORRY SALES CAUSE CONCERNS
Van registrations low but stable, trucks sinking yet lower.
• Registrations: 13,099 in January; 219,450 for the rolling year, down 34.5pc.
• Trucks: 1,553 in January; 33,263 for the rolling year, down 40.6pc.
• Vans: 11,546 for the month; 186,187 for the rolling year, down 33.2pc.
"New van and truck registrations continue to reflect a weak economic
recovery and businesses reluctant to commit to new investment," said
Paul Everitt, SMMT chief executive.
"These are the lowest January truck registrations since 1992, leaving
most truck makers very disappointed at the slow start to the year. It
is extremely important that government uses the upcoming Budget to
encourage new investment in capital goods and help re-build business
confidence."
As the scrappage scheme comes to an end in March
2010, the impact on UK car sales is likely to be substantial from April
onwards, says Mike Steventon, Partner with KPMG’s automotive group. The car scrappage scheme has recently ended in Germany and new car sales in January 2010 fell to its lowest level in 20 years.
“It is highly likely that UK new car sales will also experience a
significant reduction following the end of the UK scrappage scheme – UK
car retailers should brace themselves for a bumpy road ahead. However,
as the vast majority of cars sold in the UK under the scrappage scheme
are imported vehicles, there will be less of an impact on UK car
manufacturers and parts suppliers who are more reliant on overseas and
prestige markets”, said David Raistrick, UK Manufacturing Leader at Deloitte. “January’s new car registration figures are positive news for the
automotive sector as they climb back to the numbers enjoyed two and
three years ago. Today’s figure of 145,000 is a significant jump from
last year’s 112,000 and is more in line with January 2008 and 2007
where January registration numbers were over 160,000. “The extension of the scrappage scheme is superb news for the industry
giving buyers the chance to use up all the available funding.
"I would
expect further increases in February and March as buyers look to take
advantage of the scrappage extension as well as racing to get new
registration plates in March.
“For the industry to balance the decrease in private sales as scrappage
ends, the corporate car market must grow. Looking at total registration
figures over the past two years, the number of corporate cars has
decreased from 58pc to 49pc, while private demand has grown thanks to
scrappage. "If, as UK businesses pull out of recession, corporate and
fleet registrations increase this will help take this figure closer to
the long term average of 60pc of total sales. This could help boost
total annual numbers to the upper end of the forecasted registration
figure of 1.8-1.9 million.”
Western car markets will be concerned to see the
severe decline of new car demand in Central and Eastern Europe last
year, where sales dropped by almost a third, according to the latest
figures from JATO Dynamics.
All but one of the major volume brands experienced a downturn in sales
for the year, as the regional effects of the wider economic crisis were
compounded by rising taxes and a lack of Western-style incentive
schemes.
Less than one million cars were sold in CEE in 2009, a 28.1pc decline compared with 2008.
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