Comment: As the end of the scrappage scheme draws near, what comes next?

With the goverment’s scrappage scheme due to finish by the end of March (or as is even more likely - sometime slightly before, if the maximum number of orders is reached), it it inevitable that pretty soon the car industry will have to revert back to the much higher pre-scrappage prices that were being charged prior to the scheme.

Though one or two companies (such as Toyota and Vauxhall) will continue to offer some sort of scrappage offer of their own afterwards, the majority of the 37 participating manufacturers will be reverting to their standard pricing - which begs the question, just what kind of sales figures can be expected for the spring quarter, and then into the summer, as consumers are suddenly faced with far higher (and more prohibitive) prices?

Certain companies in particular have enjoyed massive success with the scheme - Ford and Hyandai being the two frontrunners, and indeed on the whole it has been massively successful as a way of keeping people buying new cars, safeguarding at least some manufacturing jobs and marginally reducing CO2 emissions by encouraging the use of smaller (and more efficient) cars.

However, there was always the risk that the scheme would create a slightly problematic period of market transition once it ended (which nonetheless was preferable for everyone when compared with immediate and much more drastic consequences to the market faced with crumbling demand a year ago) - and it will be interesting to see how manufacturers, and consumers, react to these changes.

I expect the used car market will once more see a surge in demand (after the slight drop off seen as a result of the scrappage offer), but beyond that it remains a tough call to judge what the manufacturers are likely to do, especially if demand for new cars curtails significantly over coming months. As always, we’ll keep you posted.

Dejan Levi

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UK motorists CO2 emissions seemingly heading in the right direction?

UK drivers are continuing to respond to the need to reduce the CO2 emissions and petrol costs of their vehicles by taking up the government scrappage scheme offer to purchase smaller and more efficient models, judging by new stats from the Society of Motor Manufacturers. Though the scheme will expire in the next few weeks, it seems the combined need to reduce emissions and fuel running costs is sending drivers in the right direction with regard to their choice of car model.

With car manufacturers also now bound by EU legislation to reduce the average emissions of their product ranges in the next couple of years it seems that it’s only getting easier to choose and run a cheaper and greener vehicle. Toyota and Fiat for example have already met the 2012 emissions reduction targets well ahead of schedule, so it seems that with each passing month there are more efficient models on offer for drivers.

For those wishing to learn more about all the options out there, one good place to start is Clean Green Cars - a great blog providing all the info, advice and resources you might need to make sensible motoring decisions regarding emissions and fuel costs (those interested in BMW will note that the company takes top spot in terms of the most efficient model available for certain categories of vehicle). I expect we will only see more and more such info as the automobile market changes to offer more choice with regard to such vehicles.

Observing all this is interesting in terms of seeing how rapidly the automobile industry has u-turned over the past decade (albeit with the influx of some massive subsidies and incentives, plus some appalling financial figures in the cases of some companies). It seems a long time ago that Hummers were all the rage… Nonetheless it is refreshing to see companies across the board putting at least some emphasis on efficiency and sensible fuel consumption - even if some of this is just marketing hype. As always the consumer will have to separate the hot air from the real thing, but at least it seems that this is now easier and more affordable than ever before.

Dejan Levi

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Scrappage scheme extended - but for how long?

The government’s business secretary, Lord Mandelson, has this week announced an extension to the ‘cash for clunkers’ scrappage scheme (whereby motorists wishing to trade in an old car get £2k towards a new one) to cover an additional 100,000 vehicles (i.e. another £200 million).

So far the scheme has been touted as being a success by the auto-mobile industry, supposedly staving off redundancies - no UK plants have closed so far during the recession - but has cost the taxpayer around £300million to date.

It seems likely that the extension to the scheme should continue to work in the same manner as has thus far been the case, with current sales showing a massive boost on this time last year (August 2009 is 46% up on previous year). Hence as well as protecting jobs, the manufacturers are even more delighted to see profits soaring despite the general gloomy economic climate. What worries me however, is the lack of a long term plan from Mandelson, who seems to have little plan beyond this short term fix.

True, the sums of money in question represent a far cheaper way to assist a key industry in trouble - (£500 million in total is very little compared to the multi-billion pound bailouts seen in the US for example), but regardless it seems likely that as soon as the next pot of subsidy money runs out, the same problems will have to be faced (declining sales, plant closures, unemployment etc).

Surely Mandelson doesn’t truly believe that the scrappage scheme should be extended indefinitely, or even that if it were to stop, the number of sales in the sector (which is currently sustaining it) will continue at the same rate? And if not, why this oddly short-sighted policy of simply extending the scrappage scheme, and avoiding the difficult restructuring that seems inevitable?

Well unfortunately I can’t help but feel that it all has something to do with the upcoming general election next year. Mandelson’s policy doesn’t really seem to extend beyond roughly this time period, after which either it will be the Conservatives problem (and if the house of cards collapses it will reflect badly on the latter - good for labour), or if Labour miraculously win - then Mandelson et al can then consider an effective long term solution at that point.

Since it seems likely that the first outcome will come to pass (Conservatives win, inherit temporary short-term fix to a bigger problem, and then have to deal with it themselves), I’m slightly disappointed that the timing of a general election is sadly seemingly impacting also on the government’s handling of an issue such as this one - with short-term solutions being the order of the day. Regardless of its outcome, it can only be a good thing for the election to be sooner rather than later - if only so that we can finally see our government seeking a viable longer term solution for the automobile sector, unlike the unsustainable one currently being used to offset inevitable difficult issues.

Dejan Levi

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Gov’t’s scrappage scheme is definitely shifting new cars - but will it do much else?

News came last week that the government’s scrappage scheme had thus far succeeded in shifting over 50,000 new vehicles in the UK. No doubt in times of downturn this is proving to be great news for car companies which would otherwise be posting far worse figures for recent months were it not for such a scheme.

Car dealerships also are enjoying a fresh boost in business where they might easily instead have been facing closure in many cases. It seems clear therefore that the auto sector is benefitting massively from the £300m scheme. But what of the much touted environmental benefits?

The first (and rather obvious) thing to mention is that we have not actually reduced the number of cars on UK roads through all this. The scheme offers only a 1 for 1 (old for new) option. So the only environmental benefits that we could hope to see will be coming from the increased level of fuel efficiency offered by the new replacements, as opposed to the very fuel-hungry old bangers that we drove before.

However all of these new cars cost a great deal (environmentally speaking) to produce. Moreover not all people taking up the gov’t’s offer are going for small and efficient replacements - the scheme extends also to bigger cars, so we are seeing many people who would otherwise not upgrade (in terms of engine size) now finding themselves financially empowered to do so - and taking up the option. Of course, many more are downsizing (petrol is again above the £1/l mark) - but we should not kid ourselves that it does not go both ways.

Ultimately the scheme is all well and good from an industry sector perspective. However the environmental benefits should not be used as an overstated excuse, when in reality £300m could have been far better spent if we really wanted to reduce CO2 emissions first and foremost.

Why, oh why, for example was there no option to simply trade in our old bangers in return for some kind of 15-year free public transport pass or something similar? I don’t doubt such a thing could have been arranged - and i for one would for sure have taken up that offer without any hesitation. Then we might really have been able to talk about environmental benefits - as it is we are instead touting the most miniscule (and not to mention cost-ineffective) reduction in CO2 emissions as some fantastic global-warming averting life-saver. This is most certainly isn’t…

Dejan Levi

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Mercedes Benz Announces Participation In The Scrappage Scheme

Following Chancellor Darling’s recent announcement of a UK vehicle scrappage scheme, Mercedes Benz UK has announced its participation, and the world’s lowest-emission cabrio leads the way.

The forthcoming smart fortwo cdi cabrio - with CO2 emissions of just 88 g/km - will be available to customers taking advantage of the scheme, including the full £2,000 saving. Other smart models including the invigorating BRABUS performance range will be available.

Additionally, every Mercedes Benz - from A-Class to S-Class - will participate in the scrappage scheme.

Commenting on the announcement, Simon Oldfield, Sales Director Mercedes Benz Cars said: “We welcome the Government’s objective of the scrappage scheme to replace older, more polluting vehicles with clean new cars - so it seems appropriate to offer the world’s cleanest production cabrio, our new smart cdi, to customers.”

Read more at Carpages

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Mercedes Benz Announces Participation In The Scrappage Scheme

Following Chancellor Darling’s recent announcement of a UK vehicle scrappage scheme, Mercedes Benz UK has announced its participation, and the world’s lowest-emission cabrio leads the way.

The forthcoming smart fortwo cdi cabrio - with CO2 emissions of just 88 g/km - will be available to customers taking advantage of the scheme, including the full £2,000 saving. Other smart models including the invigorating BRABUS performance range will be available.

Additionally, every Mercedes Benz - from A-Class to S-Class - will participate in the scrappage scheme.

Full story at Carpages

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