Incentives needed for industry to prosper according to carmakers

20 May 2020

Calls for scrappage schemes to help the automotive industry are increasing, with carmakers in the UK joining associations across Europe in asking for help to improve post-coronavirus (COVID-19) sales.

While dealerships in Europe are starting to reopen, the UK Government has decreed that showrooms can only operate on a ′click and collect’ basis until at least 1 June, although repair shops can remain open. This means the country is likely to lag well behind other markets when it comes to new-vehicle sales in May.

Therefore, manufacturers are concerned that their UK sales will take longer to recover, and are calling for an incentive scheme, similar to the scrappage scheme of 2009 and 2010, to help boost the industry.

Industry speaks

Speaking to ITV News as engine plants in Dagenham and Bridgend returned to work, Ford of Britain managing director Andy Barratt insisted that the carmaker will not be able to return to pre-pandemic levels of production unless its showroom network reopens and the Government does something to stimulate demand for new cars.

′It is Ford’s view that it is necessary we have a stimulus in the market to help customers come back with confidence,’ Barratt told reporters. ′That may be a scrappage scheme or something similar but without a doubt, some sort of stimulus is needed to get the car business moving in the UK. Without any degree of stimulus, there is no doubt we can’t keep the factories running on the UK demand levels as they are.’

In an interview with Car Dealer Magazine, JLR UK managing director Rawdon Glover echoed this call. ′The whole industry needs a stimulus,’ he stated. ′For me, it has to be wide-ranging, it has to be simple and we would like it to be in place – if anything was put in – by July because we work in quarters and being able to integrate that into our quarterly sales and marketing plans would be key.’

The 2009/2010 scrappage scheme introduced in the UK saw 395,500 total units registered in a year, helping the industry to recover while also boosting the country’s economy as it dealt with the global financial crisis.

French plans

Meanwhile, French finance minister Bruno Le Maire has suggested the country will look to bolster sales of low emission ars as part of a support package, which is expected to be unveiled in the next two weeks.

Le Maire told France Info radio the Government aimed to use any support package or scrappage scheme to encourage a shift towards less polluting vehicles.

′I will announce a support plan to get consumption going again, in order to help this transformation towards a more sustainable model, with particular support for the cars that emit the least CO2,’ he said.

While not going into any further detail on the plans, the minister did acknowledge that electric vehicles (EVs) are too expensive for many households to consider.

Any scrappage scheme could look to remove older vehicles, Euro 5 or below, and incentivise hybrid and electric models only. This would encourage countries to reduce air pollution, and help carmakers to meet strict CO2 emissions levels set by the European Parliament.