Currently reading: New car buying incentive scheme ready - but may not be needed
Proposal would not feature scrappage or be focused on electric cars, but would be aimed at preserving UK jobs
Jim Holder
News
3 mins read
30 July 2020

A draft plan for an incentive scheme to stimulate the UK car market has been drawn up and is ready to put to Government, but only if it is required, Society of Motor Manufacturers and Traders (SMMT) chief executive Mike Hawes has revealed.

Talking after revealing that car production in the UK is down 42.8% in the first six months of 2020, Hawes revealed that far from certain that any such scheme will be considered: while new car registrations fell 44% year-on-year in March, 97% in April, 89% in May and 35% in June they are widely tipped to be up for July, with official figures set to be revealed next week.

The surge in purchasing is attributed to the unlocking of pent-up demand during lockdown, with July being the first full month that dealerships in Scotland, Wales and Northern Ireland were able to follow English outlets and open.

Private lease renewals and Motability sales are reported to have been particularly strong, while Autocar also has anecdotal evidence from sources who prefer not to be named that around one-fifth of buyers are spending more than they previously budgeted as a result of saving during lockdown.

“There are positive signs, and we’ll see the final figures next month, but of course it is a long way from showing that the market has recovered,” said Hawes. “What I believe Government rightly wants to see before taking any decisions is the true picture; we’ve had a freezing of the market, now we have an unlocking - but the really crucial period will be up to the plate change in September and then into the fourth quarter.”

While Hawes declined to reveal specifics of the draft plan - highlighting concerns that hopes of any scheme could stall any recovery of sales - he revealed that it would not take the form of the previous scrappage scheme, when older cars were taken off the road in exchange for a £2000 incentive half funded by Government and half by the car maker.

“Whatever form the scheme takes, it has to support the UK car industry and UK jobs, and we are a country that mainly produces larger, more premium vehicles,” said Hawes. “The last scheme was very positive, but it did focus on the smaller end of the market where the money made more of a difference to the buyers.”

That comment raises the prospect of a percentage discount being applied to purchases, although Hawes would not be drawn to comment. Asked how the public might react to subsidising higher-end car purchases, Hawes added: “Any scheme will be about protecting jobs, and we believe what we have will achieve that.”

Hawes did, however, outline that a solely electric vehicle focused scheme was unlikely, as it would have a minimal impact on helping the industry. “The UK manufacturers a limited amount of electric cars or car parts, and allocations of these cars around the world are limited and to a very large degree pre-ordered, especially since France and Germany have already set out their stall in that area,” he said.

READ MORE

One in six UK automotive jobs under threat, says SMMT 

UK plant closures to cost car industry £8.2bn 

Aston Martin to cut 500 jobs due to reduced sports car production

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Bainthrewo 30 July 2020

Out of kilter

Mike Hawes own words show how out of touch UK vehicle manufacturing is, admitting we produce mainly larger, more premium vehicles and a limited amount of electric cars and car parts. No way should any tax-payer money be wasted continuing to support this.  The Government and SMMT should be looking to incentivise ‘UK Car PLC’ to produce lighter, smaller, less resource-hungry, sustainable vehicles.

Much as we love cars it’s clear the whole global industry needs a ‘reset’ - overproduction and too much reliance on credit based sales to achieve profit and encourage people needlessly into new vehicles every 2 or 3 years is unsustainable.  The Covid shock provides the opportunity to re-think and not simply go back to the old ‘normal’. Like Jon 1972 I believe it will be some time, 18 months or more, before the effect of Covid on drivers needs and habits becomes clearer. Since lockdown I have worked, as have most of my colleagues, full time from home. (I’ve only done 270 miles since 23 March) My employer anticipates, when things have settled, staff averaging 2 days per week in the office instead of 5 pre-Covid, saving @40,000 commuter miles/month alone not including pool car and business miles and will congratulate themselves on the CO2 saving topped up by divesting themselves of all the office space they no longer need.  People will reflect on their commuting needs and whether they still need a car, downsize or use alternatives.  Interesting times ahead!

405line 30 July 2020

The local

authorities and the government are killing of the sales of cars anyway so I am not certain what this article is about. The pent up demand it my area was somewhat "pent down" by a letter from the local council stating that many of the nearby roads are to be closed to vehicles, this is not a political comment because closing roads maybe a good thing it's just that it's at odds with owning any a car in general. After my current car fails I don't think I will be buying another, the government just keep taking the ***s year in year out.

gavsmit 30 July 2020

Resentment

I resent tax payers money being used to further car manufacturer's profits rather than translate into cheaper cars for people that need them. Let's face it, with recent extortionate car price hikes, any governement incentive will quickly be swallowed up into raised list prices and therefore profits. It's like what happens with the taxation of fuel - reducing fuel tax just leads to the fuel companies raising their prices to make more money from the expectation of what that fuel used to cost with the higher tax rate applied - and us consumers just put up with it with a bit of pointless moaning as usual.

If there has to be an incentive, as mentioned by this article, it should be made for cars built in this country, or using components / services provided by this country, and for lower emissions, to get some kind of benefit in terms of the country's economy and the environment.

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