Car industry seeks scrappage scheme extension

Posted by MotorTorque.com in News and Views on September 19th, 2009

£300m has been ploughed into scrappage, but car manufacturers want more

I’ve written a few times recently about the potential for calamity when the scrappage scheme comes to an end, which will be anytime in the next few weeks according to most industry watchers.

The Treasury initially put aside £300m for the scheme - enough for 300,000 people to make use of the scheme to trade in their ten-years-plus car and drive away in a shiny new, well, anything they fancy with £2K off the asking price.

The government has said many times that it will not extend the scheme, and some voices within the industry have warned against extending the scheme, notably Fiat, but others are pushing for an extension – probably mindful of the likely crash in car sales when the stimulus is withdrawn.

Now, it seems, Lord Mandelson is meeting with the Society of Motor Manufacturers and Traders to discus the possibility of extending the scheme.

Mandelson has been sympathetic to the car industry and its plight so far, and the government is keen to maintain its investment in the economy, so that any green shoots of recovery are not jeopardised.

That’s probably sound thinking when it comes to the economy, but the car industry has been hit by the recession twinned with the impact of chronic over-capacity.

Scrappage has ensured that this over-capacity has been maintained, and another extension may only put off the pain of the withdrawal of the government incentive.

Nevertheless, with three of the slowest months in the year for shifting metal coming up, an extension could be as vital as the original scheme was thought to be back in Spring.

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Tags: Car Dealers New, Fiat, scrappage