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
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.


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30 July 2020

September is the month that'll tell us if the market has improved.

30 July 2020

Large sectors of the economy have been unaffected by the virus. Government employees, financial services, health care, food production and retail. Significant numbers of workers are working from home and are to be frank, going to be either permanently based at home or at a minimum significantly more than before.

The effects of covid on the whole economy and car buying patterns won't fully emerge until later in the year and the final impact won't be apparent until maybe 2/3 years down the line. We're considering if we need 2 cars and it seems certain that we no longer need 2 cars costing around 50k between them. That won't factor until into next year when my PCP end and we work out what exactly what we are using our cars for. Currently one of them went from 18k miles a year to not turning a wheel in 5 months and I may never return to an office 5 days a week.

One months sales won't uncover these patterns. 

30 July 2020

Any scheme must focus on low emissions, and not give any discount on dirty vehicles. 

It is sickening enough that motor manufacturers are legally allowed to buy in credits from electric vehicle manufacturers to offset their own emissions. That allows continued production of unnecessarily big and/or heavy and/or fast fuel guzzling cars.

There is no point saving jobs if we don't have a livable planet. 

30 July 2020

I've got 3 cars to choose from and whereas in the past I'd be thinking everyday of replacing one I'm now thinking of selling one for the simple reason I can't see me every doing the mileage again, it's pretty sad seeing them seating on the driveway without moving for 10 days at a time, and that's without thinking of the £1000 on tax and insurance.  Actually, even 2 cars seems excessive these days.

30 July 2020
I can't see me dropping below 2 cars as my wife and I work in different directions at different times and public transport is impractical or simply unavailable depending on my shifts. But I have no interest in replacing either car any time soon. Some of my colleagues have bought cars during these difficult times but they've all been used purchases.

I have no idea what will happen in the long run with more people now working from home, there's is surely going to be less need for additional cars in many households, of course what that could mean is the second car may become a more fun car purchase than a practical commuter car?

30 July 2020

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.

30 July 2020

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.

30 July 2020

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!

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