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Scrappage scheme end branded 'irrational'

Mazda claims it would be ‘irrational’ for the Government to end the scrappage scheme when planned and will be campaigning for its continuation.

 

On announcing the scheme, the Government insisted it will end either on February 28, 2010 or when its £300 million in subsidies runs out.

SMMT figures reveal Mazda has had 639 car registrations since the scheme was introduced on May 28, including 439 in June, and around 2,000 orders.

While its success in the scrappage scheme is a long way from the likes of Toyota (4,468 registrations), Hyundai (4,664) and Ford (4,299), Mazda managing director Jeremy Thomson is keen to maximise opportunities from what he sees as a new sales channel.

“It is irrational for the Government to end the scrappage scheme even if its subsidy runs out. It appears to be cash positive for the Government since its contribution appears to be exceeded the tax take,” he said.

“The scrappage scheme has also been welcomed by manufacturers and consumers and so I cannot see why it would not continue for the foreseeable future.”

Mazda, Thomson said, would campaign for continuance through the SMMT.

He admitted the benefit to the brand would never match that of Hyundai or Kia, but 2.5% of scrappage sales would be a “fair share”.

From July 1, Mazda began a sales campaign around scrappage, offering up to £5,000 off certain models, “which in some cases includes some of the dealer margin”.

Thomson believes measures taken to combat the impact of the recession has produced a strong dealer network.

Mazda has moved finance provision from its captive source Mazda Credit to Santander, a move Thomson says has saved dealers an average of £25,000 in funding costs annually, plus brought funding for new wholesale stock to 3.5%.

“The cheapest it’s been for decades,” he said. Dealers’ finance house base rate also reduced from 6.1% to 1.5%.

Stocking levels are also between a half and a third what they were in the middle of 2008, plus Thomson said, Mazda is being more “modest” in its requirements for building investments.

Such measures, he said, had helped achieve retail sales of 73% in June – against a forecast of 56% - and return on sales of 1.7% year-to-date, “ a little above the industry standard”.

Interest in the Mazda franchise is high also.

There are a number of open points in a network, almost all of which Thomson believes, will be filled this financial year, principally through existing Mazda dealers expanding territories.

Current open points are Gateshead, North London, West London, East London, Reading, Croydon, Medway Towns, Eastbourne, Lichfield, Bridgend, Bedford, Hemel Hempstead, Banbury and Omagh.
 

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