Steady success for scrappage

Posted on 4 Jun 2009 by The Manufacturer

The Society of Motor Manufacturers and Traders (SMMT) has labelled the start of the scrappage scheme as “encouraging” but warned it will take time for new orders through the scheme to materialise into registrations.

People buying a new car and scrapping one over ten years old at the same time can get a £2,000 discount – half of which is supplied by government and half of which is footed by the manufacturer.

The Department for Business, Enterprise and Regulatory Reform recently revealed 35,000 orders have been placed since the scheme went live on May 18. There is £300m state pot available, meaning a further 265,000 consumers can benefit the scheme before it is withdrawn in March 2010.

Despite the scheme and its initial successes, the UK automotive industry is still 27.9% down on registrations for the year, a statistic that equates to 290,000 units.

“While consumer confidence is improving, the UK motor industry is still facing a difficult economic climate,” said SMMT chief executive, Paul Everitt. “We have seen an encouraging start to the scrappage incentive scheme with 35,000 orders being placed since it was announced, although it will take time to feed into registration figures.”

The SMMT said it thinks consumers will still be holding off on purchasing for the time being, playing the waiting game and seeing if manufacturers decide to drop prices further.

A survey by the Retail Motor Industry Federation (RMIF) found 92.8 per cent of automotive dealers have experienced an increase in enquires on new cars following the announcement of the scheme. Middle-aged people are moving quickest to take advantage, with 63.7 per cent of those buying under the scheme aged 45 to 60.

So far this year, diesel cars have a 44.1 per cent market share which is slightly up on 2008’s 43 per cent. Small, efficient cars are doing the best with Ford’s Fiesta and Focus and Vauxhall’s Corsa taking the top three spots respectively in the best-selling charts for the year. RMIF’s survey found the majority of cars being purchased under the scrappage scheme have 1.0 to 1.3 litre engines (66.9 per cent).

Source: SMMT