A leaked letter from the SMMT to Chancellor Rishi Sunak and Business Secretary Alok Sharma has revealed that the SMMT is campaigning for a 1.5bn scrappage scheme to revitalise the British automotive industry in the wake of the pandemic.
First reported by The Guardian, the letter allegedly argued the case for a “market stimulus package” that can “support the entire market, not just disproportionately favouring specific segments or technologies, recognising the diverse nature of UK automotive manufacturing”.
To this end, any such scheme should encourage the purchase of combustion-engined cars as well as EVs, said the SMMT, with discounts of £2500 hoped to put 600,000 new vehicles on the road.
The last scrappage scheme, in 2009, offered new car buyers £2000 in exchange for their old vehicle as part of the industry’s recovery from the recession, with more than 400,000 vehicles sold as a result.
The Guardian quotes the SMMT as arguing that a new scheme “could also support wider government ambitions in terms of climate change and improved air quality”, but that the primary benefit “would be in jump-starting the market, the sector and the economy without further drain on the public purse”.
Further proposed benefits include taking automotive workers off the Government’s job retention scheme and reducing the risk of mass redundancies by driving demand for new vehicles.
The new car industry has suffered a significant and rapid downturn during the pandemic. In April – when most British manufacturers had paused production – just 4321 cars were sold, and recent figures show that just over 20,000 were sold in May.
But such a move would be unpopular with the aftermarket. The IAAF argues that most vehicles taken off the road would be ‘very much roadworthy’, meaning a scrappage scheme would “have a significantly negative effect on public mobility and the automotive aftermarket”.
Chief Executive Wendy Williamson said last month: “Motorists are currently under great pressure, and they should not be penalised for keeping hold of vehicles that are in good working condition and can continue to be serviced, repaired and maintained long into the future.
“Not only is this unfair to consumers, but it is putting the aftermarket at great risk, as it will result in a direct decrease in the number of vehicles entering independent garages.”
The IAAF suggests that, rather than implementing a universal, nationwide scheme, the Government should instead target drivers who live or work in low-emission zones, as they will be more likely to swap into a cleaner, newer vehicle.