Scrappage extension is not surprising, but the aftermarket jury’s still out

Today’s news that the Government is extending its scrappage incentive scheme is not so surprising really, given the inordinate amount of pressure heaped upon it by the new car sector – and others.

And let’s not forget that every Government as it draws nearer to a general election needs a crowd pleaser at its annual party conference.

Since its launch in May, the scheme has certainly proved its worth to VMs and their dealer networks, and has pumped much needed cash back into the new car market.

As one factor I bumped into last week argued: “It’s easy for the aftermarket to bash car makers but we do actually need them to produce the new cars that we service.”

As of today, 227,750 new cars have been purchased through the scheme – and in just four short months, that’s not bad going.

But what of the wider effects on the aftermarket? When the scheme was first mooted, it sparked a backlash from the independent sector.

Many told CAT that they feared such a scheme would mean losses for the parts replacement sector and for independent garages, which had been capitalising on consumers’ newfound frugality.

AFTERMARKET FEARS

Perhaps it’s too early to say whether these fears have been realised.

How many of the cars consigned to the scrap heap were kept effectively off-road and therefore not within the reach of the maintenance sector; how many would not yet have been due their MOT or service?

These are questions to which we don’t yet know the answers; but the anecdotal evidence I’ve heard from garages and factors is that it’s been pretty much business as usual.

But the long-term impact could be quite something. Most OE parts manufacturers are usually pretty quiet when it comes to this kind of issue, but it is almost certainly a worry for their aftermarket divisions.

At a press conference this summer, I asked NGK Europe’s deputy managing director, Norbert Neuhaus, what he expected would be the impact on his company’s aftermarket parts sales.

And refreshingly, he didn’t hesitate to answer: “We think the European car parc will lose 4 million cars to the scrappage scheme, which for us could translate to 16 million cylinders.”

That’s no small number.

And he added that it’s not just the parts market for vehicles in this country that will be affected.

Many cars, once they have reached the end of their wanted life here are shipped over to the developing world where they continue to require parts and service. That is business that is lost to the parts sector, too.

VANS NOW COVERED

What may provide a silver lining for the aftermarket is the news that, from today, vans aged 8 years and older are also covered by the scrappage scheme.

That could provide a boon to distributors wishing to breathe new life into their fleets.

Do you own a van(s) that falls into this age bracket? Is the £2000 incentive enough to make you consider renewing your fleet? Would you turn down the opportunity as a matter of principle? (I’m sure you’ll let me know just how silly a question that last one is!)

I’d love to hear from you on this issue – it’s one that we’ll be analysing further in future editions of CAT, so get in touch at emma.butcher@haymarket.com or by using the comment facility below.