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AIA

Budget 2009: Mixed reviews for car scrappage scheme

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23rd Apr 2009
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The Chancellor’s car scrappage scheme has been largely welcomed by the automotive industry but questions linger over how effective it is likely to be.

Under the new rules, motorists will receive a £2,000 discount on new cars when trading in vehicles over ten years old, with half being provided by the car manufacturers and the remaining £1,000 supplied by the government. The scheme will be implemented from next month until March 2010, and the industry is hoping it will stimulate demand in a waning marketplace.

“This is good news for consumers and will get people back into showrooms, kick-starting demand in the market”, said Paul Everitt, chief executive of the Society of Motor Manufacturers and Traders (SMMT).

However, given that approximately four fifths of the cars sold in Britain are imported, only a handful of local manufacturers are likely to benefit.

“The scrappage scheme will not specifically target cars made in the UK”, said Matthew Alabaster of PriceWaterhouse Coopers. “Only around 15% of cars bought in the UK are made here. The beneficiaries would be producers of small, high volume cars, most of which are imported from the rest of Europe”.

The AA has also warned that the increase in fuel duty (which will be upped by 2% from September) will more than cover the scheme’s costs and effectively meant that the government was ‘giving with one hand and taking with the other’.

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