Car scrappage scheme

Government must act on introduction of a car scrappage scheme

20 March 2009

AA Personal Loans has today urged the Government to decide whether or not to introduce a car scrappage scheme, which will help Britain's ailing car industry by boosting sales. It has also called on the Treasury and the Bank of England to ensure more credit is available for consumers to take advantage of such a scheme.

Edmund King, AA president, commented: "The plummeting car production figures of 57%1 show the urgent need for a boost to this vital industry. Car scrappage schemes in countries such as Germany are already having a positive effect on sales. The Government needs to decide now whether or not they will introduce a financial incentive to buy new cars."

An AA/Populus poll of 17,000 drivers showed that more than a quarter of Britons would consider taking advantage of such a scheme. This would bring confidence back to the market and mean we would have safer, greener, cleaner cars on the roads.

Mark Huggins, director of AA Personal Loans, says that such a scheme would help kick-start the stalled motor industry, as well as help reduce CO2 emissions and improve road safety.

"A scrappage proposal ticks all the right boxes. I believe it would be a popular move and would allow many families to buy their first brand new car. But the uncertainty means some potential buyers are putting off their purchasing decisions.

"The scheme would also help consumers obtain loans to purchase new cars and it would make a huge difference when it comes to choosing a new or nearly-new car. AA Personal Loans monitors car buying behaviour through its CPI (Car Purchase Index) and it is clear that economy is now more important than any other factor when it comes to making a car purchase decision.

"We think that owners of older, larger cars which now have little value will particularly benefit. For many families, a £2,000 incentive, coupled with a typical car loan of £8,000 over five years, will bring within reach a brand new car that is cheaper to run and tax and kinder to the environment."

factfile

1The number of new cars produced last month in the UK crashed 59% compared with February 2008, according to official figures from the Society of Motor Traders and Manufacturers (SMMT) released today (20 March 2009). With vehicle companies cutting back drastically on production, just 59,777 cars were made in February 2009. Commercial vehicle production fell 71.6% compared with February 2008.

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20 March 2009