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UK Scrappage Update: two months on

UK Scrappage Scheme Now OfficialNow that the US has followed other countries with its own scrappage scheme, charmingly named “cash for clunkers”, we thought we’d take a look at how the UK scrappage was progressing after its launch on the 18th May.  Industry bodies and manufacturers alike condemned scrappage plans as too little and ineffective, with both Honda and Ford initially refusing to take part.  Environmentalists also argued that trading in ten year old vehicles was ineffective, as they had already done the worst of their polluting already and the cost of building new vehicles far outstripped the environmental impact.

Scrappage fund running out fast

Two months on and the evidence certainly contradicts the initial pessimism, with 121,737 cars resulting of the scheme as of 22nd July, with 86,638 in June alone.  Sales figures still aren’t back to where they were last year, but the scrappage scheme certainly appears to have had an impact on the decline.  The fear now is that the scheme will run out too quickly and many buyers may miss out.  The UK government invested £300m to fund its share of the discount and stated that the scheme would run until March 2010 or until this money ran out.  A government spokeswoman admitted that funding was now expected to run out in October, or November, and would not be extended. Industry sources said there would be pressure on the Government to continue the scheme, but the Department for Business, Innovation and Skills said it was “adamant” it would not extend it.

UK manufacturers lose out to imports

One industry prediction was that the majority of cars sold would be imports, not benefiting the UK auto manufacturing industry or workers and this appears to have come to fruition.  Early figures showed that a very small percentage of sales had been British made Jaguars or Land Rovers, while small imported cars are ultimately winning in the sales stakes.  Industry economist Professor Garel Rhys estimates that only 7,000 UK made vehicles will be sold and many of these sales may have occurred naturally with people replacing their vehicles.

SMMT chief executive, Paul EverittSMMT chief executive, Paul Everitt states that credit for new cars is also a major barrier, “The availability of affordable finance and credit remains the number one priority for companies at all levels of the supply chain” and went on to say that “there is an urgent need for the Automotive Assistance Programme to start delivering the support the UK motor industry needs”.

If sales continue at the current pace, it may well continue until December and the 10 year age limit specified by the government for traded in vehicles is no longer a strict barrier to entry.  Nissan and Mitsubishi all offer flexibility allowing the scrappage of cars of eight years and five years old respectively on certain models including the Micra, Note and Colt.  High discounts are also available from some manufacturers including Citroen, offering up to £3,000 off specific vehicles and this doesn’t take into account bargains available in local dealerships.  So the underlining message is that the scrappage scheme has been a success so far for many car makes and buyers will need to move fast to take advantage of it.

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Related posts:

  1. Worldwide Scrappage Scheme Update
  2. UK Scrappage Scheme Now Official
  3. Scrappage scheme kicks off with 35,000 sales

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