High-end car makers say scrappage scheme won't help them
22 April 2009

The scrappage scheme unfairly benefits the manufacturers of small cars and does not do enough for the premium sector, some car makers have claimed.

In his Budget speach the chancellor announced that when a car more than 10 years old is scrapped the government will offer a £2000 discount on a new car. This discount will be part-funded by the government and the manufacturer of the new car.

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However, it is feared that £2000 will not be enough of an incentive to boost the sales of high-end cars.

A spokesman for Jaguar land Rover said the company supports measures that stimulate demand for new cars, but added: “The initiative by several European governments to introduce scrappage schemes has clearly had a positive initial effect on demand, but generally this has been limited to smaller car sectors.

“Accordingly we expect very limited direct benefit of the UK scheme for those manufacturers such as Jaguar Land Rover engaged in the premium sector.”

BMW is also sceptical about the effect scrappage will have but said it does anticipate taking part in the scheme.

"Any government measures that encourage people back into showrooms is something we would welcome, but this is short-term and doesn’t benefit every manufacturer in the same way," said a spokesman.

"The government needs to look at other measures like encouraging people to buy low emissions cars."

Other manufacturers gave the scheme a cautious welcome, criticising the part-government, part-manufacturer funding proposal.

Paul Philpott, managing director of Kia UK, said: "Kia welcomes the government’s positive response to the difficult times facing the new car market but I am personally disappointed that our chancellor is only going half-way compared to other European governments.

"The devil will be in the detail and I am sure the Society of Motor Manufacturers and Traders will be looking for early meetings with the Treasury to discuss this.

"The reality is that the government is shifting a large part of the cost of this programme onto the shoulders of the manufacturers, when it is the manufacturers who are working hard night and day to deal with the effects of the economic turmoil and recession around the world."

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