Carmakers delay car scheme start

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Industry hopes for car scrapping scheme

Ford and Honda have delayed the start of their involvement in the UK car scrappage scheme, saying there are a number of matters still to be resolved.

Ford has suspended deliveries of vehicles to dealers, while Honda has told its dealers not to register any cars under the scheme.

Both carmakers have expressed concerns about the VAT arrangements.

Cars that are more than 10 years old can now be scrapped in return for a £2,000 discount on a new model.

Both manufacturers have said they remain committed to the scheme, with Ford saying it was confident it could begin sales "within a few days".

'Seeking clarification'

Under the scheme, the government will subsidise £1,000 while the motor industry will provide at least a similar discount.

However, Honda says it is seeking clarity on the contribution from industry, as well as on a couple of other "administrative points".

In terms of shifting new cars it's not going to do as much as hoped Kieran Puffett, editor of car price guide Parker's Send us your comments Read a selection of your comments

A Honda spokesman said: "Relating to the £1,000 contribution - the original request was for a contribution of £1,000 from the industry.

"We were looking at splitting that between the manufacturer and our dealers but we're being told that we can't do that."

He added that they were being told that manufacturers alone would have to make up the payment, and Honda was challenging that.

A spokesman for Ford said: "Based on details which have only become apparent late in these negotiations [between the government and manufacturers], Ford is working to resolve some outstanding administrative issues."

The Society of Motor Manufacturers and Traders (SMMT) said it was seeking to clarify the exact tax position.

Ford sold more cars than any other manufacturer in the UK in 2008. Latest SMMT figures show that Ford accounts for almost 17.5% of all cars sold in the UK so far this year, giving it the biggest market share so far in 2009.

'Industry boost'

Business Secretary Lord Mandelson has said the £300m scheme will "provide a boost to the industry and kick-start sales".

But critics say it is not generous enough and does nothing to encourage the take-up of low emission cars.

A scrappage scheme is exactly the sort of policy we need during a recession. It will boost demand and help the environment at the same time David Frost, British Chambers of Commerce

New UK car sales were down 28.5% in the first four months of 2009 compared with the previous year.

Earlier this month, research by car price guide Parker's found that of 600 people questioned, 81% said they would not be taking advantage of the scrappage deal.

"An awful lot of people were putting off their car-buying decision until they heard about the scheme and having heard it it's not actually enough for them to really think about buying a brand new car," said Kieran Puffett, editor of Parker's.

"They will be looking at other alternatives. So in terms of shifting new cars it's not going to do as much as hoped."

However, the British Chambers of Commerce (BCC) welcomed the initiative.

"A scrappage scheme is exactly the sort of policy we need during a recession. It will boost demand and help the environment at the same time," said the BCC's director general David Frost.

'Flood of enquiries'

So far 38 manufacturers have signed up to the scheme.

Unlike some other countries, the UK scheme doesn't prevent motorists part-exchanging an old, small model for a brand-new gas guzzler Andy Atkins, Friends of the Earth

Similar initiatives have already been tried in other countries. In Germany, for example, a scrappage scheme helped boost new car sales by 40% in March.

Lord Mandelson said that since the announcement of the scheme in the Budget there had been "a flood of enquiries from customers".

Meanwhile, motoring organisation the AA said it could pump as much as £2bn into the UK's car sector, adding that even if only 1% of motorists took it up, it would be over-subscribed.

President of the AA Edmund King said the scheme would "transform the chances of survival in a crash for thousands of car owners" whose current old cars offer substantially less protection than newer models.

But Friends of the Earth executive director Andy Atkins said the scrappage scheme was "a lost opportunity" to cut emissions.

"Unlike some other countries, the UK scheme doesn't prevent motorists part-exchanging an old, small model for a brand-new gas guzzler," he said