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UK bosses call for scrappage scheme to kick-start car market

Government support is essential to boost UK economy, say bosses

British car industry bosses are calling on the government to provide support to car buyers to help kick-start the economy.

Speaking to ITV News, Ford of Britain boss Andy Barrett said, “It’s Ford’s view that it’s necessary we have stimulus in the market to help customers come back with confidence. That may be a scrappage scheme or something similar. But without a doubt some kind of stimulus is really needed to get the car business moving in the UK again.” 

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Barrett also feels that stimulus is needed to boost the British economy and to keep factories running. “Without any degree of stimulus there’s no doubt that we can’t keep the factories running on UK demand levels as they are”, he said. “Other countries around Europe are bringing stimulus in so manufacturing and production will move elsewhere.

“What does that mean? It means that actually the UK tax revenues start to drop quicker and we’re now facing quite a large UK bill to pay.”

Auto Express understands that the industry is preparing a number of suggestions to put to government, including grants and a scrappage scheme, but nothing has yet been put forward, nor has there been any indication of support from the government.

When asked about the potential of a UK scrappage scheme, Mike Hawes, SMMT Chief Executive was clear that getting dealers open was the first step on the road to recovery. “People haven’t been able to buy cars or have orders delivered during lockdown so the immediate priority is to reopen showrooms to fulfil this pent up demand,” he said. “The time will come when government may need to assess measures to stimulate consumer confidence but the first step to recovery for this market is to let dealers get back to the business of selling cars, as they can do so safely.”

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However, Alison Jones, boss of PSA in the UK, which covers Vauxhall, Peugeot, Citroen and DS, confirmed that industry discussions have taken place and a proposal was being put to government. Talking to Car Dealer magazine she said, “To have a stimulus package, it definitely needs to be around CO2 and not just ultra-low emission vehicles, there are a lot of good ICE vehicles now with low CO2 so that would encourage customers to go into lower CO2 and ultra-low emissions vehicles, and then to have a cap on that value as it needs to help the people that need it most. 

“That’s what we’re working with and putting to government alongside industry colleagues and that debate is finishing at the moment.

“I think government is interested in the discussion, whether they will ultimately support it I don’t know, but I think it absolutely needs to be around the environmental credentials we’ve been working to as an industry.”

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Jones also hinted that car buyers may be waiting for some sort of scrappage scheme before they buy. “Customers may wait for a stimulus package before making a decision,” she said.

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Earlier in the month, Kia Europe boss Emilio Herrera told Auto Express that he thought car sales could get back to normal levels later this year, but only with government support. “We need to make sure that the governments provide a good support plan for the industry otherwise that will not happen,” he said. “The majority of the countries are looking at a support plan: Germany is looking at it, France is looking at it, Spain is looking at it, Italy also. I’m sure the UK is looking at it, discussing with the SMMT to have a support plan for the industry. 

“With that, the second half [of the year] will be even better than we think.”

Volvo boss Hakan Samuelsson has also called on governments to focus on subsidising electric vehicles, saying that restarting or enhancing existing incentives on electric vehicles would help manufacturers and respond to consumer trends. “If you do scrappage schemes then you should do what you would do anyhow,” Samuelsson said. “It’d be good to promote new technology - good for governments to support electric vehicles, which are more expensive in the first years.

“I believe that after coronavirus it would be naive to expect everything to return to normal - to think that consumers will come back into showrooms asking for petrol or diesel cars. And if governments in some way subsidise a return to the old world, it’ll be a waste of money. They should use the money to promote new technology, as they were planning to do before coronavirus.”

Do you think the government should be doing more to help the car industry? Let us know in the comments below...

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