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Britain reports scrappage boost

Cash for scrap: Almost 40 UK car companies have joined the UK government's scrappage incentive scheme.

Industry cautious, but UK government claims 35,000 sales under new scrappage scheme

General News logo2 Jun 2009

BRITAIN’S new scrappage scheme has been hailed a success by the government less than two weeks after it was introduced, with claims last week that more than 35,000 new-vehicle orders had been placed since the subsidy was announced in the budget on April 22.

Prime minister Gordon Brown said the 300 million ($A605 million) scheme, which came into action on May 18 and offers consumers a 2000 ($A4040) subsidy split evenly between the government and the manufacturer, said the 35,000-plus orders equalled one scrappage scheme order for every five new-car orders placed over the period.

“I am determined to do everything I can to see Britain through the downturn quickly and build a stronger Britain for the future,” he said. “That is why I am delighted that over 35,000 people have already taken up the government’s offer of help to buy a new car when they scrap their old one.

“This scheme not only helps hard-pressed consumers, it also helps protect British jobs by stimulating demand for new cars.”

80 center image Left: UK business secretary Peter Mandelson.

Business secretary Peter Mandelson proclaimed on Friday that the scheme was “winning all round”.

“The scrappage scheme has got off to a flying start. It has given car sales a major boost and offers consumers a great deal,” he said.

Britain’s car industry body, the Society of Motor Manufacturers and Traders (SMMT), was more cautious about the results. SMMT chief executive Paul Everitt said he was encouraged by the government’s claim, but insisted June registration data would provide “a better indication of the longer-term impact of the scheme’s success”.

Another spokesman for the SMMT, which is not expected to release the official May sales figures until next Monday, told Reuters he was keen to see whether forward orders and interest would translate into hard sales for the second half of May and the full month of June.

“We are encouraged by the positive start to the scrappage scheme,” said the SMMT spokesman. “There has been an increase in showroom traffic and website inquiries, but it will be a good couple of months until we see the true impact on the market.” The Retail Motor Industry Federation (RMIF), which represents UK dealers, said the government figures indicate that the scheme is having a “positive effect” on the new-car market.

“The incentive scheme is helping the industry revive sales, while also helping consumers get into a new car this is a double win,” said RMIF director Sue Robinson, adding that survey results on the public’s reaction (as seen by dealers) would be published this week.

British car sales slumped 24.0 per cent in April (to 133,475 vehicles) against an average of 29.7 per cent drop over the first three months of the year, whereas sales in Germany and France have increased dramatically on the back of scrappage incentives.

The British scrappage scheme differs from other countries in being split between the government and participating manufacturers. According to the government, 38 manufacturers have signed-up for the incentive payments, including all the volume car-makers.

The country’s biggest car manufacturer, Nissan, has already benefited from European scrappage schemes, increasing production at its Sunderland plant and employing an extra 150 contract workers from June to meet a spike in demand.

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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