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Car chiefs want scrappage scheme extension

With funds for the scrappage scheme incentive running dry, car bosses are calling for a replacement scheme to avoid car sales "falling off a cliff".

The £3 billion fund set aside for the scheme was expected to last until next March, but the funds will most likely run out at the end of next month.

Lord Mandelson has already ruled out an extension of the scrappage scheme and

Tony Whitehorn, managing director of Hyundai UK, whose company has seen a sales boom under the scrappage scheme, said: "The money is two thirds gone and at the current rate it will be gone by the end of October.

"It has been a massive success but if it comes to a sudden halt we will see car sales across the industry fall off a cliff. We need the government to start thinking now about what comes next.

"The industry needs a soft landing, hopefully that will be through some sort of extension of the current scheme and then a gradual tapering off. The scheme has to end at some point, we all understand that, but it needs to be a gradual landing."

Hyundai saw its sales rocket more than 300 per cent in August to 3,700 cars.

Whitehorn added: "Yes, we have benefitted but so has the whole industry and so have all the dealers. Vehicle sales in the UK are down 22% over last year but without scrappage that would be 30%.

"The Government has got to come up with some announcement as to what happens beyond October because lots of wheels have to be put in motion. The current scheme has proved that given an incentive people are willing to spend. It would be madness just to stop it.

"Scrappage may have artificially stimulated the market but that doesn't matter."

Toyota Motor Europe chief Didier Leroy also called on incentives to be continued.

"They have come to a stop in Germany and the market has gone completely dead because the government has not announced what happens next.

"Everyone is expecting some sort of replacement scheme but until they are told what it is they are staying out of the showrooms."

There is agreement as well from the luxury end of the market where there has been little benefit from the scrappage scheme.

Bentley's sales and marketing chief Stuart McCullough said: "We have not sold any cars through the scrappage scheme but in terms of the industry generally it has worked very well and put much needed liquidity into the market.

"What the industry doesn't need is a hard landing."

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