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Scrappage scheme: The manufacturers' view

AM looks at the manufacturer view, with Kia Motor's Paul Philpott, Tony Whitehorn from Hyundai UK, Paul Willcox from Nissan GB and Robert Hazelwood from Skoda UK.

Paul Philpott, MD of Kia Motors (UK) said, “I’m amazed the spin doctors have called this a £2,000 Government scrappage scheme when half the money has to come from manufacturers.“

“We don’t have a pound to give away on the smallest cars now, so this will force manufacturers or dealers into selling on extremely low margins or loss-making cars. At the same time the Government will be enjoying an incremental increase in VAT from the surge in new car sales.”

All of Kia’s range will be available through the official scheme and it’s promoting the entry level Picanto at £4,195, thanks to £1,000 each from the Government and Kia – and the same from the customer as a deposit, buying through Kia’s Access finance package. 

But, Philpott said, this offer is a means to get customers into the showroom. Dealers are experiencing a “fair amount” of customer enquiries already.

“Dealers will use all their sales prowess to stop customers being drawn into the cheapest car because the margin will be too small. We must make maximum use of the increase in showroom traffic to tell people not to settle for the entry level models or base spec,” said Philpott. 

“For our dealers we will make it work however we can. We will not strip dealer margin, but we may adjust some programmes,” Philpott said.

The Government investment of £300 million will, in theory, fuel a maximum increase of 300,000 new car sales by the time the scrappage scheme ends in February 2010. Kia would normally expect a 2% share (6,000 sales). However, because of the likely appeal of Kia as a value brand, it expects to take a larger share.

Carmakers welcomed the aid as a driver for prospective business and increased footfall in their franchised networks. Although some were disappointed the Government’s contribution will be only £1,000, many have declared plans to offer additional incentives for buyers. 

Hyundai UK managing director Tony Whitehorn said he expected a huge increase in demand. “Although we had hoped for a £2,000 contribution from the Government, £1,000 will help drive business through our doors at this time of recession.

We will strive to match this price or an even higher price once the details have been confirmed,” he added. 

Nissan GB MD, Paul Willcox, said it was disappointed the scheme only includes cars aged 10 or older. As a result, Nissan will guarantee a £2,000 minimum trade-in for cars aged eight-10 years part-exchanged against new Micras, Notes, Qashqais and Qashqai+2s in order to support its UK assembly plant at Sunderland.

Robert Hazelwood, Skoda UK brand director, said: “Anything that stimulates consumer demand for new car sales is positive. Overall, it’s a great deal for customers – helping more people to get into modern cars that are safer, greener and more economical to run.”

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