No more scrappage scheme - What now?

Now that the scrappage scheme has been scrapped, questions are being raised as to how the UK motoring industry will be effected by its end.

The chief executive of Pendragon, Trevor Finn, is encouraging the Government to lengthen the scheme despite having reservations on its introduction. Finn believes that dealers and suppliers will struggle without the incentive and that the reasons for ending the scheme haven't been properly considered.

He claims the scheme has been self-funding because the majority of people who bought a new car would otherwise have bought a used car, meaning the Government would only have picked up the VAT on the profit the dealer makes rather than the sale price.  

However, the National Audit Office outlines that the £400million scheme has not been value for taxpayer money because it only brought forward car sales into 2009 that would otherwise have occurred in 2010 or 2011, with VAT charged at a lower rate of 15 per cent.

Finn however, is firm in his backing of the scheme, stating that he: “totally disagrees” with the National Audit Office and outlining his company’s survey found that 70 per cent of those that bought a vehicle under the scrappage scheme had never bought a new car; and 82 per cent would not have bought a new car without the incentive.

The Society of Motor Manufacturers and Traders has now forecast that sales in the UK will fall 10 per cent this year without the incentive.