AM Online

The Big Picture: Jeremy Bennett, Editor

The scrappage scheme is having the desired effect of turning around the slump in new car sales. July registrations are up 2.4% on a year ago, halting a month-on-month slide.

So successful has the scheme been that there are now growing calls for it to be extended. And it’s no wonder in many respects: July’s registration total beat SMMT forecasts and private registrations improved with consumers tempted by offers of £2,000 off the price of a new car.

But I have concerns about placing too much hope on what will always be a transitory measure. 

While many countries have successfully introduced scrappage schemes, how many have sustained positive sales once they have come to an end? 

There are fears in Germany of a second credit crunch next year because its scrappage scheme has helped disguise the weakness of the country’s economy.

There are also factors closer to home to worry about: the return of VAT to 17.5% or more before the end of the year will dampen consumer confidence, while credit availability remains an underlying problem.

While I can understand the calls for a lengthened scrappage scheme, what is best for the industry is not short-term, experimental initiatives, but long-term planning built around a conventional business when the impact of the economy, new car production volumes, used car prices, profit margins, staffing levels, financing and everything else that affects a business can be judged more realistically.

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