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Audi Oz supports scrappage call

Call for action: Audi Australia managing director Joerg Hofmann has call for an Australia scrappage scheme, even though it is unlikely to benefit his company.

Audi boss declares a Euro-style scrap incentive ‘a very good idea’

Audi logo15 May 2009

AUDI has called for early implementation of an old-vehicle scrap incentive in Australia.

It would be similar to the scheme successfully introduced in some countries in Europe over the last few months, where owners of cars more than nine or ten years old receive a government-funded discount on a new model.

Audi Australia managing director Joerg Hofmann said a ‘scrappage’ scheme would stimulate new-vehicle sales in Australia, especially in the sub-$20,000 category.

He pointed to the situation in Germany where, since the beginning of this year, more than one million additional new vehicles have been sold as a direct result of the scrappage incentive, for a 20 per cent rise in year-to-date volume.

Mr Hofmann contrasted this to the 20 per cent fall in new-vehicle sales in Australia over the same period, while arguing that a government-funded incentive would help cull some of the 2.47 million vehicles more than 15 years old.

This equates to about 21 per cent of the total ‘car park’ while the average vehicle age in Australia is among the highest in the western world at 9.9 years.

He added that replacing old vehicles with new would bring improvements in safety, and potentially contribute to reduced emissions and fuel consumption, since most new vehicles are generally more efficient than old ones.

 center imageLeft: Audi A3 1.9 TDIe.

Mr Hofmann also revealed that his company had prepared a report known as the Audi Australia Environmental Bonus.

Mirroring the successful old-vehicle scrappage scheme devised in Germany at the beginning of this year, Audi’s calculations conclude that it would be essentially be “self-funding” to the federal government.

In other words, Audi Australia says the costs would be more or less offset by the amount of new-vehicle sales tax that the Federal Government collects if it implements an old-vehicle scrappage incentive.

Using a theoretical $2500 “Environmental Bonus” as an example, Audi Australia concluded that a $19,990 vehicle (which attracts government tax of $3748.78 if it is imported or $2458.18 if locally produced) would still yield $1248.78 for each import, and cost the government just $41.82 a vehicle after the bonus has been paid.

“We call it an ‘environmental bonus’ because the whole incentive is to get all the old cars off the road, and put more fuel efficient and safer cars on the road,” Mr Hofmann said.

Using the example of his mother, the long-serving Audi Australia boss counteracted criticism that scrappage incentives simply pull forward new-car purchasers by saying that research in Germany suggests that most people who take advantage of the scheme had no desire to buy a new car.

“There are pros and cons … some people are saying that the only thing that (incentives) do is pull sales forward, and yes, that’s certainly part of it.

“But we realised in Germany is that a lot of people who said they would never buy a new car again are now buying one.

“The example of my old mother: she would never have bought a new car because she said ‘my little old car is good enough’ but she bought a new Volkswagen because she said ‘I take my €2500 bonus and take my old car that was not worth anything anymore and I bought myself a new car’.”

Mr Hofmann believes that an environmental bonus would be good for the Australian economy because it would stimulate sales during a period when it was most needed, and then when the economy improved, natural demand would underpin a sales recovery anyway.

“You need a good stimulus to get the cars out right now,” he said.

And while Audi Australia would not directly benefit from a $2500 scrappage incentive (“except maybe for selling a few more A3s,”), Mr Hofmann believes the Australian motor industry would instantly reap the rewards. “The biggest benefit for the scheme would go to all the local manufacturers of cheap cars like Holden and Ford … it would be a big benefit for the local economy to get (Australian-made car sales) up and running,” he said.

Read more:

‘Cash for clunkers’ scheme closer in US

Brits scrap over scrappage

Scrappage blow-out costs Germany

Dealers continue scrappage push

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