The Government will press ahead with the introduction of tough new vehicle recycling targets, despite warnings that it will force carmakers into insolvency. The Department of Trade and Industry suggests the 'end of life vehicle' (ELV) deadline - making carmakers responsible for recycling all their cars - should be brought forward from 2007 to next year.
Garel Rhys, Cardiff Business School automotive professor, said ELV would impose “great costs” on manufacturers, particularly those with large car parcs but smaller current sales levels like MG Rover and Ford.
“The impact on the industry's resources could be dramatic and in some cases, technical insolvency is a possibility,” he said. “MG Rover, for example, needs this like a hole in the head.”
Prof Rhys expects the Government to push through the legislation because it affects industry rather than voters. “It will happen next year - the Government hasn't listened to good arguments made by the industry,” he said.
Loss-making MG Rover expects to delay investment in new models, or raise prices, to meet a bill which could exceed £200m.
One carmaker accused the Government of “pandering” to the green lobby. “It believes this move will be a political hit,” he said. “The UK will be seen as one of the greenest countries in Europe.”
Salvage and recycling operators say they could not handle the massive volume of end of life vehicles.
An SMMT spokesman said: “Carmakers and salvage operators are not ready to handle the sort of volumes that ELV would create. The Government is aware of the likely impact of bringing forward this legislation - estimates put the costs at around £300m a year.”
Prof Rhys added: “The Government may force carmakers to fund recycling facilities that are up to the task because few salvage operators can presently dismantle cars for recycling.”
The SMMT, confident it can convince the Government to reverse its proposals, has until November 2 to make recommendations to the DTI.