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Lord Mandelson should extend the old-car scrappage scheme to ensure the battered motor industry pulls firmly out of recession, one of Britain's top dealers said today.
“At the current rate the money will have run out before the end of this year,” said Trevor Finn, chief executive of the Evans Halshaw and Stratstone dealerships' owner Pendragon.
“The Government had planned to scrap 300,000 cars and we as an industry will have to start lobbying soon for there to be, say, another 150,000 which would take us into next spring.”
Under the scheme, launched by the Business Secretary and Prime Minister Gordon Brown in May, the Government puts up £1000 and the manufacturer another £1000 for people who turn in their 10-year old bangers and buy a small fuel-efficient new car. On the latest figures 155,000 people have taken advantage of the scheme.
Finn said scrappage now accounts for one in 10 of his dealers' sales, with Ford leading the way. But he also pointed out that it has proved to be revenue neutral for the Treasury.
He said: “In effect the Government is getting back in VAT the £1000 it puts up for each scrapping. It is also clear that the scheme has attracted people who would not necessarily have been looking at changing their car yet so it has not simply dragged forward sales which would have happened anyway.” The scrappage scheme and a recent strong recovery in second-hand car prices saw Finn today predicting second-half sales growth after 18 months of dire trade for the market.
He said: “I'm guardedly optimistic and I think are numbers are slightly better than the City expected.” Finn said the group, which owns 279 dealerships, agreed three-year terms with its lenders on a £530 million facility in June. It is now looking to use some of that to build up its stocks of second-hand cars, which Finn said had returned to price levels not seen since the start of 2008.
He said: “While cars under the scrappage scheme are definitely scrapped, the fact that they are nor coming onto the used-car stocks has helped to boost second-hand prices.” New car registrations fell 26% in the first six months of the year but Pendragon's revenues dropped 36% to £1.59 billion. Pre-tax profits halved from £17.9 million to £8.7 million. As revealed earlier in the year Pendragon has suspended dividends while its strengthens its balance sheet, which saw debt down £40 million to £318 million in the first half.
Pendragon closed 14 more of its less-successful dealerships during the first half. It also said that after sales, repair and maintenance had remained steady during the recession.
Reader views (8)
"Lord Mandelson should extend the old-car scrappage scheme to ensure the battered motor industry pulls firmly out of recession, one of Britain's top dealers said today."
...well they would say that, wouldn't they.
- Toby Webster, Ongar, England, 18/08/2009 15:51
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Today I received a cheque in the post for £5,500 towards a new car if I exchange my seven month old car. Has the Government gone mad?
- Albert Hall, hove england, 18/08/2009 13:43
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Its all future money being spent now. In a couple of years no one will be buying cars cos they bought them already and the motor industry will be in the same pickle as it is now.
- Rikrok, Lonodn, 18/08/2009 13:42
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I sympathise with Howard's comment about British built vehicles only but can Robert tell us how he knows where the cars come from?
- Peter Bench, London, 18/08/2009 11:59
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If it is extended I think the new car should have to be in MPG class of C (maybe B) or better. That way the car industry will be encouraged to move to more efficient cars. I also think date the scrapped car was made should have to stray the same, e.g. next year the car should have to be over 11 years old)
- Ian, Stockport, 18/08/2009 11:21
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Hmmmmm... How many of these cars ar actually scrapped, and how many re-enter the market or get sent abroad in scams?
Can anyone truly prove they are not on the raods?
- Suspicious Sam, England, 18/08/2009 10:50
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OK it helps the car dealers and gets in VAT for the government but does nothing for the UK car industry as most of the cars bought are foreign built. I would like to see a breakdown of cars that are bought. Also this forces a lot of buyers to take up credit at a time when their debts should be reduced.
- Robert Thornton, Malaga, Spain, 18/08/2009 10:15
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well such a move would definately go down well withe French, German and Far Eastern car manufactures.
Only extend the scrappage scheme IF it is based on the purchase of a UK manufactured or assembled car
- Howard, Herts UK, 18/08/2009 09:32
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