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Dealers continue scrappage push

Clunker: Owners of cars like Holden's now-12-year-old VT Commodore would be eligible for a new-car subsidy under a European-style scrappage scheme in Australia.

MTA claims scheme would benefit environment and safety as well as boosting sales

General News logo7 Apr 2009

By DAVID HASSALL

THE Motor Traders' Association of NSW has renewed calls on the federal government to introduce a car scrappage scheme in Australia, despite industry minister Kim Carr saying that it was not necessary to boost local car sales.

New-car sales data from Europe indicates that scrappage incentives have made a huge difference, with the Western Europe market dropping a modest seven per cent overall in March.

Germany, which has the biggest scrappage scheme, grew by 40 per cent compared to the same month last year.

MTA NSW chief executive James McCall told GoAuto he was surprised the federal government was not taking the scrappage issue more seriously given the environmental and safety benefits associated with junking old cars on top of the proven economic stimulus.

“We would have thought this scheme would have appealed to the government because it has a three-pronged affect – economic activity, environment and public safety. I would expect them to take it seriously.

“Every country in the world seems to think that it’s a great idea to stimulate their economy, except us.

“I believe the government is doing some absolutely brilliant things and it bewilders me why they wouldn’t then look at a scheme like this when they’ve been so positive in other areas.

“They give $2000 for a gas conversion, so $3000 for a scheme like this would be eminently sensible.” Mr McCall said he had written to treasurer Wayne Swan and last week held discussions with assistant treasurer Chris Bowen.

He said there was general approval for the government’s $2000 bonus for an LPG conversion to benefit the environment, so there should be widespread support for a $3000 scrappage bonus that would get unsafe, inefficient cars off the road.

“Here we’ve got a scheme that would generate economic activity, certainly from the dealers’ point of view secondly, the environmental consequences – the majority of those cars under $3000 don’t have catalytic converters and those that do are stuffed, so we’re targeting the greatest pollutants on the road – and the third thing is that a lot of those cars are not very safe to drive, so it would be making a considerable contribution to public safety.

“This government has done heaps for the manufacturers, (but) it’s done stuff-all for the dealers.

“The government is prepared to put billions and billions of dollars into motor vehicle manufacturing to try and prop up the 50,000 workers – we’re talking about 80,000 workers in dealerships across Australia that are in real trouble because of the market that’s dropping considerably.” Mr McCall was also critical of the manufacturer-dominated Federal Chamber of Automotive Industries, whose CEO, Andrew McKellar, has backed the government in favouring the new capital investment tax incentive scheme over scrappage.

“Ford and Holden have their noses out of joint. Initially, Andrew was 100 per cent behind this and now he seems to have done an about-turn.

“I consider that to be incredibly selfish on the part of the manufacturers. They’re quite happy to go boots and all for anything that supports them, but when it comes to their dealer network they treat them like they always treat dealers – absolutely abysmally.” The latest sales data in Europe has increased pressure on the British government to follow the lead of other major markets that have benefited from introducing ‘cash for clunkers’ incentives.

While Germany recorded a 40 per cent gain to 401,000 vehicle sales in March on the back of a $5000 incentive for scrapping a car more than nine years old, Britain recorded a 30.5 per cent drop to 314,000 units.

The Society of Motor Manufacturers and Traders (SMMT) in the UK said the government “needs to do more to boost confidence”.

“A scrappage scheme will provide the incentive needed and the evidence is clear that schemes already implemented across Europe do work to increase demand,” said SMMT chief executive Paul Everitt.

“The UK is the only major European market not to implement a scheme.” The SMMT has the support of both major British automotive publishers – Haymarket Media Group (Autocar and What Car?) and Dennis Publishing (Auto Express and Evo) – who have published open letters urging the government to announce a scheme in the April 22 budget.

France reported an 8.1 per cent sales increase in March while Italy was up only 0.24 per cent, but that was its first increase in a year. Spain remains depressed, but its 38.7 per cent drop represented a slowdown compared to previous months.

With 600,000 of 1.2 million existing applications still to be processed, Germany has extended its wildly successful scheme to the end of the year, by which time it will have paid out about three times the original €1.5 billion ($A3.1 billion) estimated cost.

In the United States, the Obama administration supports introducing a similar scheme but is being delayed by Congress.

Arguments persist over whether the incentives should only apply to people buying American-made cars, whether it should be linked to fuel consumption and where the funding would come from.

The American International Automobile Dealers Association (AIADA) has warned that the scrappage bill contains pitfalls in the form of the proposed constraints.

AIADA chairman Russ Darrow said he would support any scheme that drove traffic into showrooms, but that the proposed “protectionist” qualifications made no sense because they would exclude fuel-efficient vehicles like the Toyota Prius that are built outside the US.

“We need a plan that will benefit the entire auto industry, the environment, and all American dealers,” said Mr Darrow.

“The government is in no position to tell consumers what cars they should drive. Americans are perfectly capable of making informed decisions, and should be trusted to do so.

“Let’s be smart about it. Cash for clunkers makes the most sense when it is applied to all vehicle brands sold in the United States.”

Read more:

Carr rejects scrappage talk


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