The new scrappage initiative is designed to both to help boost the UK economy in the wake of the coronavirus lockdown and to encourage the take-up of vehicles that have lower carbon emissions. First reported by the Telegraph, the government is set to announce the scheme on 6 July.
Exclusive research carried by Autocar's sister brand What Car? shows that 29% of car buyers are delaying plans to buy a new car post-lockdown in the hope of a taxpayer-backed scrappage scheme.
The What Car? survey of 6632 new car buyers also revealed that nearly 19% have changed the brands they were considering pre-lockdown, and 25 per cent will be downsizing to a smaller car. Notably, around one-in-12 buyers have said they are looking to buy a pure EV as a result of the lockdown, with one-in-seven likely to opt for a hybrid.
Those figures will provide encouragement that a low carbon vehicle-focused scrappage scheme can be effective both in boosting sales of such vehicles and getting older and higher-emitting cars off the road.
How will the 2020 scrappage scheme work?
The original government scrappage scheme was introduced in 2010 to boost the economy following the financial crisis. It was based on a £400 million pot, with buyers given £2000 off (£1000 from the government and £1000 from the manufacturer) for scrapping a model aged 10 years or older. Nearly 400,000 cars were bought under the scheme in 10 months. There was some controversy that all cars traded in had to be scrapped, including some roadworthy rare models.
The UK government currently offers a plug-in car grant of up to £3000 for anyone buying a vehicle that produces less than 50g/km CO2, has a zero-emission range of at least 70 miles and costs less than £50,000. But it axed incentives previously offered for buyers of plug-in hybrid vehicles.
The UK car industry has been pushing for a scrappage scheme after sales virtually dried up in April and May due to showrooms being forced to close. Encouraging sales of new cars would also help to boost production demand.
The move by the UK government to tie a post-lockdown economic stimulus scheme to low-carbon vehicles is similar to programmes introduced by both the French and German governments in recent weeks.
While plans to introduce a scrappage scheme will be welcomed, there are concerns in the industry that limiting any schemes purely to electric cars – which still account for a tiny proportion of the overall market – will limit the economic boost it will offer.
Speaking recently, Volkswagen sales boss Jürgen Stackmann said that the "automotive industry can be a powerful driver to help" boost the economy. But he added that any incentive scheme should not be focused purely on electric vehicles because of their relatively low sales.
“A scrappage or exchange scheme could be built around encouraging people into cleaner, modern cars,” said Stackmann. “There are talks to combine a scrappage scheme with a shift to e-mobility, which we can understand. But people need to understand that focusing only on e-mobility will not restart the economic engine.”
Daksh Gupta, the boss of major dealership chain Marshall, recently told Autocar that he thought there was "no question" that some form of stimulus package was needed to boost cars sales. He said: "Research from the last scrappage scheme showed that 91% of people that bought a car were people that would have absolutely not bought a new car otherwise."
Gupta said that his preference would be for some form of grant that would benefit all brands fairly, and cautioned the low margins manufacturers achieve on full electric vehicle sales would limit the effectiveness of a scheme that focused purely on such cars. He added: "Many manufacturers are selling EVs at a loss because of the cost of production, so we are trying to educate [the government] about the benefit of going with hybrid and EVs, or even Euro 6."
autocar
0 Comments