In another worrying week for the UK’s automotive sector, the Society of Motor Manufacturers and Traders (SMMT) has repeated calls for a European-style scrappage incentive scheme to persuade customers back into showrooms.
Taking its lead from similar initiatives in France and Germany, the scheme would allow cars and vans over nine years old to be scrapped in return for a £2,000 cash incentive towards a new vehicle.
As well as stimulating a European market that has seen sales of new vehicles collapse, such schemes are also viewed as an opportunity to help hit EU emissions targets by getting some of the more polluting vehicles off the roads.
Ministers are said be examining how well the system is operating in other countries before giving it the green light here.
But with German scrap yards reportedly busier than they have been for years, the early evidence is that it may, in the short term at least, be breathing a little life back into production facilities and forecourts of the European motor industry. German car dealers are reportedly seeing an upturn in fortunes and according to estimates, the schemes recently introduced in Germany and France are likely to generate between 200,000 to 400,000 replacements.
But despite the positive signs, scrappage schemes are not without their critics. Some have suggested that artificial incentives might just shift the problem back a couple of years, while here in the UK - where most new cars purchased are made elsewhere in Europe, the fear is that such a scheme would do little to stimulate UK industry.
Tellingly, this is not a view that's shared by the manufacturers. The SMMT is adamant that a scrappage plan would go at least some way to help create a flow of demand and get our production facilities running properly again.
Jon Excell, deputy editor
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