Government says scrappage scheme gives early boost to car sales
Fri 29 May 2009
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Government figures show that more than 35,000 new cars have been ordered through the UK's scrappage scheme since its launch in April and introduction in mid-May. The scrappage scheme gives buyers of new cars a £2,000 discount, jointly funded by the Government and industry, to motorists who trade in a vehicle over ten years old.
However, The Times reports that industry experts said that as few as 7,000 of these vehicles — or one fifth — are likely to have been built in British factories.
The SMMT says that it expects that an increasing proportion of small cars will be registered as a result of the scrappage scheme. The SMMT says that evidence from across Europe has already shown that those taking advantage of the scrappage incentive tend to buy new models at the smaller end of the market and that the early indications show the UK is following suit.
The rapid rate of take-up of the scheme since its launch on April 22 means that more than a tenth of the total £300m Government subsidy available has already been allocated. The scheme is due to run until February 2010.
The SMMT recently reported that 68,258 cars were produced in April. So far this year, 251,268 cars have been produced; 56.2 per cent lower than a year ago.
Environment groups have been critical of the scrappage scheme. Friends of the Earth said that a better-designed scheme could have played a small part in cutting emissions from the transport sector. FoE said that the Government admits that the scheme "is primarily designed to boost the automotive industry" and "was not designed as a green measure."
In Germany, meanwhile, a number of cities are developing the 'car scrappage' idea by offering subsidies for people to buy new bicycles. Mannheim became the first city earlier this month, with Witten becoming the second and half a dozen others wanting to introduce their own schemes. According to T&E, Mannheim has made €5000 available to pay 100 people €50 to exchange an old bicycle for a new one, and Witten budgeted €1000 for 20 such incentives.
T&E director Jos Dings said in a letter to the Financial Times newspaper that the scrappage schemes were 'absurd', and governments should scrap subsidies for the car industry, not cars.
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