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The Low Carbon Economy Ltd

19 May 2009 09:05:07

UK car scrappage scheme dealt severe blow

UK car scrappage scheme dealt severe blow
The UK's £2,000 car scrappage discount scheme has been dealt a blow following the news that two large carmakers will not be supporting it.

Launched on Monday (May 18th), the initiative aims to encourage road users to trade in their old cars for newer, more environmentally-friendly models.

However, manufacturers Ford and Honda have pulled out of the proceedings, citing concerns that the government will leave them to pick up the bill.

Under the terms of the scheme, which was announced as part of April's Budget, motorists are entitled to discounts of up to £2,000 on new cars - half of this will be paid by the government and the rest is supposed to come from the car industry.

According to the Society of Motor Manufacturers and Traders (SMMT), though, manufacturers will be expected to put up the industry's half of the discount and will not be able to split it with dealers, as had previously been thought.

Despite the early hiccups, Edmund King, president of the AA, said that the scheme has the potential to help the UK's most disadvantaged drivers upgrade their vehicles.

"In effect, the £2,000 incentive can act as a deposit against loans for many less-well-off drivers," he explained.

Motorists must own cars that were registered in the UK before August 31st 1999 to qualify for the scheme.

The SMMT reports that Renault has seen a 30 to 60 percent increase in showroom traffic as a result of the initiative, while Citroen witnessed a 15 percent increase in April registrations following the implementation of its own scrappage scheme.



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