Vehicle scrappage scheme has ‘no benefit’ for second-hand dealers

June 16, 2009 at 2:35 pm Leave a comment

thescrapscheme
A Conservative MP has claimed that problems with the government’s vehicle scrappage scheme are evident “after only a month of its operation.”

Nadine Dorries secured an adjournment debate on the scheme last night.

Introduced at the Budget, it is a voluntary scheme for motor dealers.

If a dealer joins they give customers £2,000 off a new vehicle if they scrap their old one, provided the car is more than ten years old.

Ms Dorries said that 28 days into the scheme, Business Secretary Lord Mandelson declared it a success.

“It is slightly premature to issue such a press release after such a short time,” she said.

“For example, there is limited consumer choice.

“There is also a focus on new car sales, instead of the entire motor trade.

“Of course, the scheme was introduced, practically the night before the Budget and released the next day, as an emergency measure to boost the flagging car industry.

“One cannot say that it has failed in that—today’s figures show sales of 60,000 cars in a month—but other parts of the motor industry are as important.

“In his initial press release, the Secretary of State said that the scrappage scheme was intended to stimulate car sales across the whole motor trade and that the benefits of the scheme would be balanced with the needs of other sectors of the car industry, such as the second-hand car market.

“However, we know that that has not been the case. In Britain, the only way in which to secure the £2,000 support is for a motorist to acquire a new car or a new van by visiting a dealer.

“There is no benefit for the modern second-hand market for people who might wish to trade up rather than commit the larger net amount to an entirely new vehicle.

“I believe that some people from lower-income groups and the elderly are disadvantaged as a result.

“Many people who have a 10-year-old car have a 10-year-old car because they cannot afford to trade up to a new car. The difference between the 10-year-old car and the new purchase is pretty huge.”

For the government Ian Lucas, Parliamentary Under-Secretary of State for Business, Innovation and Skills, said the scrappage scheme was brought in “because of a crisis in one of our most important industries.”

“Some 60,000 vehicles have been sold under the scheme; that is about 10,000 or 12,000 vehicles a week. That is a direct stimulant to the economy,” he said.

Mr Lucas said that in order to observe the requirement for low-carbon transport, the scheme will be time limited.

“Our calculations indicate that the scheme as a whole will be carbon-neutral, because there is evidence that newer cars use less fuel than older cars.

“Vehicles over 10 years old are being taken off the roads and replaced by vehicles new to the roads, which use lower amounts of fuel and emit less carbon into the atmosphere. They therefore make a positive green contribution.

“It is important to realise that the scrappage scheme is only one of the schemes that the Government are introducing in the automotive sector.

“The automotive assistance programme is another device instigated by the Government to assist the industry.

“That has particular environmental aspects which require the manufacturers to take environmental steps in order to qualify for assistance.

“The Government recognise the importance of offering specific incentives in order to address the needs of the environment.”

Mr Lucas said there was no evidence that elderly people are being deterred by the scrappage scheme, “if anything, the initial evidence appears to be the contrary.”

“I actually have evidence myself of the scheme’s success, because, strangely this week, having been newly appointed as the Minister responsible for the scheme, I received a letter from my local Toyota garage, which sold me my car some years ago,” he said.

“My vehicle is just over 10 years old and therefore eligible for the scrappage scheme, and in the letter’s PS the garage told me: “as demand has vastly exceeded our expectations—most Toyota new car models are now in short supply.”

“That is evidence from Wrexham, and I hope that it is an indication that the scheme will be successful, and that its good start will continue.”

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