The government is to go ahead with a vehicle scrappage scheme, under which anyone trading in a car or van that is at least 10 years old and no more than 3.5 tonnes will be offered £2,000 towards a new vehicle. The scrappage scheme will operate from mid-May until March 2010, or until the £300m of government funding dedicated to the scheme has been used.
Business secretary
Lord Mandelson says: "This is targeted action with a capped budget and for a limited time, designed to boost the whole motor trade. "This will ensure that the benefits of a scrappage scheme are balanced with the needs of other sectors of the car industry such as the second-hand market, maintenance and repair businesses, and other industries that produce consumer durables or on the taxpayer," he adds.
However the scheme has been criticised in some corners of the industry. John Lewis, chief executive of the British Vehicle Rental and Leasing Association (BVRLA), says: "Most people scrapping a vehicle will still not be able to afford or access the credit they would need to purchase a shiny new car or van."
Tony Wilson, chairman of exhaust and catalytic converter manufacturer Klarius Group, adds that the scrappage scheme may not boost manufacturing output in the UK but will see an increase in automotive imports from the
Continent.
Meanwhile automotive industry expert Michael Vassallo - assistant director, equities research, at Brewin Dolphin Investment Banking - welcomed the scrappage scheme, saying that a similar incentive programme in Germany boosted monthly sales by 39%.
Reed Business Information Limited.©2009
