Car industry says new car scrappage-style stimulus now ‘critical’

The UK car industry says it is “bitterly disappointing” the chancellor has yet to announce support for the UK automotive industry which has been hard hit by the coronavirus crisis

Car production restarts at Nissan Sunderland

The UK automotive industry has called the lack of specific support from chancellor Rishi Sunak “bitterly disappointing” and says a dedicated support package is now “critical”.

Sector-specific support for the automotive industry is needed “urgently” says the Society of Motor Manufacturers and Traders.

The UK, it says, is the only country of Europe’s ‘big five’ economies not to provide a support package for the automotive sector.

It is something the SMMT has “been calling for repeatedly over the last three months,” said chief executive Mike Hawes.

In a leaked letter seen by the Guardian last month, a possible £1.5bn scrappage scheme or ‘market stimulus package’ was outlined.

This would give new car buyers £2,500 off and help put 600,000 cars on the road.

It would not be restricted just to electric vehicles, and include regular diesel and petrol models. It “must support the entire market” said the letter.

The scheme would make money, said the SMMT: the UK economy would see a net benefit of £3 for every £1 spent, through VAT and VED car tax.

An earlier, more generous £6,000 scrappage scheme focused on pure electric cars was reportedly rejected by the government

‘Biggest challenge in living memory’

Mr Hawes warned that overseas investment could be deterred by the lack of dedicated support for the automotive sector.

Germany, he said, has proposed a €5bn package of incentives, while France has revealed an €8bn support package, including a scrappage scheme.

In the first month of the scheme going live, French new car sales grew 1.2 percent; in contrast, June 2020 car sales in the UK were down 35 percent.

“The industry is already facing its biggest challenge in living memory and until critical industries such as automotive recover, the UK’s economic recovery will be stuck in low gear,” said Mr Hawes.

“Year to date registrations are now down 48.5 percent, representing the lowest level since 1971 and resulting in an estimated £1.1 billion loss to the Treasury in VAT receipts alone.

“This is clear evidence as to why we need policies that provide broader support for consumer confidence to boost big-ticket spending, which in turn will help drive manufacturing.”


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Richard Aucock
I'm director at Motoring Research. I run a bit, cycle a bit, have a huge love for the automotive industry.


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