The British government’s car-scrappage scheme, which ended last month, is credited with helping up to 400,000 consumers buy new cars and save 4,000 jobs in the auto industry across the U.K.
The 10-month scheme was designed to deliver a boost to the industry at the height of the global economic crisis, offering a £2,000 ($3,024) grant to scrap an old car in exchange for a new one.
“The figures show this scheme gave vital support, boosting demand when the industry needed it most, helping to position the auto sector to meet the challenges of building a strong low-carbon future,” Business Secretary Lord Mandelson is quoted as saying.
The Department for Business, Innovation and Skills says vehicle scrappage accounted for 20.4% of all new-car registrations in the period during which it ran.
Some 54% of buyers surveyed by the government had never bought a new car before, while about 60% of new-car buyers under the scheme were more than 60 years old.
Some 56% of those surveyed said they would not have bought a vehicle if the scrappage incentive had not been introduced.
New vehicles purchased through the plan had average carbon-dioxide emissions of 133 g/km – 27% lower than the average carbon-dioxide of the vehicles they replaced.
The average age of vehicles scrapped under the scheme was just over 13 years, and 90% of all cars scrapped were 10- to 16-years old.
The government says vehicle scrappage helped keep production lines running in the U.K. and created jobs, including 350 workers hired atMotor Mfg. (UK) Ltd.’s Sunderland plant due to increased demand.
Motor Co.’s engine plants at Dagenham and Bridgend have been working overtime, as 90% of Ford cars bought under the scheme have a U.K.-built powerplant.
“Scrappage will continue to impact registration data for a couple more months, and while a slight dip in the market is expected, recent growth in business and fleet demand will soften the impact of the scheme’s closure,” Society of Motor Manufacturers and Traders CEO Paul Everitt says in a statement.
With the start of a new financial year on April 1, the government boosted taxes for vehicle buyers.
U.K. motorists buying a car now are subject to a new-vehicle-excise duty (VED), also referred to as a showroom tax, designed to steer buyers towards choosing lower-emissions emitting models.
The one-off rate will apply to all new cars for the first year of registration, with the exact cost based on the vehicle’s CO2 emissions.
Cars emitting less than 130 g/km will be exempt from VED charges for the first year. Rates will vary from £110 ($166) for cars emitting 131-140 g/km to £950 ($1,437) for cars emitting more than 255 g/km.
Motorists will pay the first year rate of VED when buying their car, reverting to the new standard rate every subsequent year.
For cars emitting 121-130 g/km of CO2 this equates to a first-year reduction of up to £120 ($181) on current rates, or £90 ($136) on the new, increased rates. Based on 2009 registrations, this will apply to about 7.2% of the new-car market, with the reduction encouraging sales of the lowest-emitting models.
At the upper end of the market, the first-year rate equates to a £545 ($824) increase, with a £30 ($45) hike each subsequent year. Just 1.5% of cars registered in 2009 would fall into this category.
Based on 2009 figures, the most popular segment – accounting for 19.7% of the market – will be cars emitting 131-140 g/km of CO2, where motorists will be subject to a £110 ($166) charge.
Everitt says the SMMT is disappointed the government didn’t take the opportunity in its recent budget to defer the introduction of the first-year rate or the increase in standard VED rates.
“Environmental taxes need to be clear and consistent, so that motorists can be confident that they will reap the benefits from their decision,” he says.
But the government says it is committed to supporting the automotive sector in moving towards a low-carbon future. It points to a number of measures, including a £30 million ($45.4 million) government fund to help reduce emissions from transport by developing low-carbon supply chains in the U.K.
The government also has a plug-in-vehicle grant promising 25% towards the cost of a new ultra-low carbon car, capped £5,000 ($7,570), open to both private and business-fleet buyers.
Additionally, the government has established a £30million fund for a network of electric-vehicle hubs, the first locations announced as London, Milton Keynes and the Northeast. More than 11,000 vehicle recharging points are to be installed in these areas in the next three years.
is receiving £20.7 million ($31.3 million) from the government to support a £420 million ($636 million) investment in a new battery plant in Sunderland.
of Britain is investing in six projects to develop a new generation of environmentally friendly engines. The government is backing a proposed loan of £450 million ($681million) to the auto maker, under consideration by the European Investment Bank.