Finer points of £2000 scheme yet to be finalised, but major point of contention set in stone
22 April 2009

Business secretary Peter Mandelson will reveal the finer detail of the government's scrappage plan next week - and it is possible that there is still room for some negotiation on how it will work.

Chancellor of the exchequer Alistair Darling announced today that a £2000 incentive will be paid to new car buyers who scrap a car that is ten or more years old. This will be half funded by the government and half by the manufacturer of the car being bought.

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However, car manufacturers do not have to sign up to the scheme, and most are holding off committing to it until they have seen the finer details of what the must sign up to.

Mandelson, who heads the Department for Business, Enterprise & Regulatory Reform (BERR), is due to meet the car makers' trade body, the Society for Motor Manufacturers and Traders (SMMT), next week to discuss the finer details of the scheme. Around 10 million cars in the UK are reported to be ten or more years old.

"All I know at the moment is that we have been invited to meet the government next week," said the SMMT's chief executive Paul Everitt. "Our initial response is that this deal is good for the consumers and good for the dealers, , but I hope we can build in some flexibility to how it will work.

"Like everyone else we are waiting to learn the details of the deal. We clearly hope there is some flexibility, as we are determined to make the best of the scheme for everyone. If the fine details can accomodate everyone's needs then it is in everyone's interests to do so."

A spokesman for BERR said: "There is room to finesse the terms and conditions, but it is only the final details, not the basis of the scheme".

The spokesman also confirmed that one major criticism of the scheme - that any manufacturer that signs up to it must offer the £2000 discount across its entire model range- was set in stone.

This is potentially difficult for manufacturers with superminis, where profit margins are often less than the £1000 the manufacturer will have to put in, and manufacturers with strong model line-ups where they would not normally have to offer a discount.

Demand for the Fiat 500, for instance, has been strong enough that discounts have been at best slight, whereas its Bravo, Punto and Panda models have traditionally been sold with large discounts.

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