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Budget van scrappage scheme gets mixed response
Date: Monday, April 27, 2009
Plans for a £2,000 subsidy for van owners who want to scrap their old vehicle in favour of a brand-new one have received a mixed response.
Announced in the recent Budget by Chancellor of the Exchequer, Alistair Darling, as part of the government’s £300m car scrappage scheme, they apply to light commercials grossing at up to 3.5 tonnes. Anybody who has owned a van within the weight range first registered before 1 August 1999 for at least a year, and wants to buy a new one, can apply for a government money-off voucher worth £1,000. The motor industry provides the remaining £1,000.
Vouchers will be available for the first 300,000 buyers to apply and the scheme will end in March 2010 at the latest. The van being traded in has to have a current MoT.
Positive
“We view this initiative as a good thing and hope it will stimulate the market, build confidence and lift registrations,” says Robin Dickeson, PR manager, commercial vehicle issues, at the Society of Motor Manufacturers and Traders.
Dealers are welcoming the programme too. “It could potentially have a significant, positive impact on motor manufacturers, the economy in general, and the environment,” says Nigel Murkett, joint managing director of Cambridge dealership Murketts Vauxhall.
Negative
On the downside, some industry insiders wonder if van owners who have been running around in vehicles that are almost ten years old are really going to be in the market for a factory-fresh model; even if they benefit from a subsidy. Online credit information provider Equifax questions how many of them will be able to obtain the necessary finance in the current economic climate if they’re not in a position to pay cash.
Used Market
The British Vehicle Rental and Leasing Association (BVRLA) fears that the scheme could damage the used sector as buyers avoid late-registered second-hand vehicles and rush to buy new ones. “The government seems to have ignored the close link between the new and used vehicle markets,” contends chief executive, John Lewis.
It’s a view shared by the Association of Car Fleet Operators. “We fear that by only including new vehicles within the scrappage scheme, demand for ex-company vans will suffer as buyers turn their attention to new ones in order to obtain the incentive,” says chairman, Julie Jenner. “This will obviously hit residual values.”
Fuel Duty Hike
Both the BVRLA and the Freight Transport Association have slammed another announcement contained in the Budget; the 2p a litre increase in fuel duty that will be implemented in September. “Coming just weeks after a previous 1.84p per litre duty rise, this announcement will increase the financial burden on millions of businesses for whom road transport is an essential tool; not a discretionary luxury,” says Lewis. FTA policy director, James Hookham, puts it rather more bluntly. “Darling has turned into Dracula,” he states.
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