The UK's scrappage scheme will be extended until the end of March, the government has confirmed
The government had previously set aside £400 million towards the scheme and it was due to run when all the money had been spent or at the end of February, whichever came first.
But not all the scrappage money will be spent by the end of February. In order to stop it remaining unspent, the Department for Business, Innovation and Skills (BIS) has moved the deadline by 30 days, to the end of March.
Lord Mandelson, the Business Secretary, said: “Against the background of the economic downturn the scrappage scheme has proved a great success, driving UK car sales, protecting jobs and supporting the supply chain for car manufacture at a time when this sector needed it most.
“If you’re considering buying a new car, you should place your order as soon as possible to avoid disappointment, because the budget is strictly limited.”
Since July 2009, year-on-year new car sales in the UK have been up every month, halting 15 consecutive months of decline. Around a quarter of a million new cars were registered under the scheme last year, out of 1.95m total sales.
November’s and December’s sales were among the strongest seen in 2009, as figures were up on 2008’s levels by 57.6 per cent and 38.9 per cent respectively. January’s sales, set to be revealed tomorrow, are expected to show further growth.
Late last year, BIS told Autocar that there would be no more extensions to the scheme, despite concerns that its withdrawal would lead to a fresh slump in new car sales.
Germany was the most lucrative market for scrappage last year, but sales have been on the slide since it ended in September. Sales last month were at the lowest level since reunification in 1990.
France, Italy and Spain, where scrappage incentive schemes are all still in place, all saw sales rise last month. But Fiat CEO Sergio Marchionne has long since warned that European sales would fall drastically should schemes be suddenly pulled from markets.
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Re: Scrappage to be extended
Mrs S's car has now been restored to health. The local economy has benefited to the extent of £200 and that nice Mr Darling has benefited to the extent of £35 without having to hand it all back to support the Korean motor industry. I'd like to see what the real costs of the scrappage scheme were in terms of lost income to the garage trade; it may even outweigh the extra bonuses for the new car salespeople.
Re: Scrappage to be extended
A car bought for more than £6,714 will involve more VAT going to the treasury than the Governmants part of the Scrappage allowance. So a net gain to the treasury? Not so. How much of that money would have been spent on something with full VAT? much of it would have. And yes its keeping garages in business that might have struggled, but other businesses that might have recieved that spending lose out.
In many cases these cars are bought using borrowed money, which is like the treasury borrowing the VAT they get. But as with almost anything were borrowing is involved the long term tax take is lower. So its more short termism.
And as for scrapping perfectly good cars, dont get me started. If the government were truely green it would encourage keeping them going. How about a Nil rate of VAT of car parts to make keeping older cars on the road a bit easier? I doubt it!
Re: Scrappage to be extended
just for arguments sake, and this has been said before-
the government (cleverly?) 'only' contribute 1k- the manufacturer the rest-
the 'tax take' from VAT above a certain threshold of car price cancels this out-
this on the large scale seen possibly results in a net gain for the treasury-
korean car makers not the only beneficiary from this- remember nissan and its added shifts, honda putting its factory back to work after an extended shut down- and all those kia/hyundai dealerships/service centres/distribution centres/importers...well, they all spend money locally and pay taxes too....
also the combined effect of pan european scrappage schemes must be taken into account too- its not just us running these schemes...(incedentally we were quite late to the party)
but yes, throwing perfectly useable cars away, even making it necessary that they are roadworthy..(why?!)..is questionable- im not sure what percentage of these older cars were recyclable...
i think its all down to the all important GDP...car making involves so many 'heavy industries' that it can make or break 'growth' figures- cash for clunkers largely attributed for pulling the US out of recession in the 3rd quarter...