Desperate times need desperate measures, so Ford’s assessment today that a UK scrapping incentive for new car buyers could have a big effect on the car market is worth considering, particularly as the 2009 Budget approaches.
The key stat is that France, Germany and Italy all now have subsidy schemes to encourage new car buyers to trade in bangers.
The result? January car markets in those three countries declined by less than half of the UK’s shocking 33 per cent collapse.
Spain is another country lacking a scrapping incentive. Its sales plummeted by a whopping 50 per cent in January. Ford is also suggesting that the Spanish government should introduce something similar, fast.
Germany’s incentive is aimed at cars over nine years old, which has the added advantage of taking more polluting and less safe cars off the streets.
Mind you, a scheme that empties the UK of pre-2000 cars probably won’t be welcomed by every car fan. Still, automotive sentiment aside, the prospect of saving jobs in car factories, dealers and design centres is definitely worth pursuing.
Significantly, Ford’s experience in Germany is that drivers who had previously never bought a new car have changed a habit of a lifetime. That’s the kind of traffic that struggling car dealers desperately need right now.
We’ve been here before, of course, and the John Major government in the mid-1990s recession ruled out a UK scheme similar to one run by France and Italy for several reasons, despite much pressure from the SMMT.
One of the main objections back then was that the boost to sales would be temporary. But that’s exactly what’s needed now, at least 12 months of lift to push the market towards recovery in 2010/11.
The second objection was that British tax-payers’ money would end up subsidising overseas car factories.
But the government can hardly follow a protectionist route, after attacking the US for linking its economic stimulus package to ‘Buy American’