UK carmakers attack trade-in plan

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Further evidence that any scrappage scheme we might end up with in the UK is likely to be an ill conceived mess that ends up helping no one. From the Financial Times: The car industry gave warning on Sunday night that it faced a potential “disaster” if manufacturers were forced to part-fund a suggested £2,000 subsidy to encourage people to trade in old cars for new.
The government has asked the industry for its views on plans, being weighed by the chancellor, to require makers to match state funding of a “scrappage” subsidy for people trading in a car more than nine years old for a new or nearly new vehicle.

A 50-50 split, with the state and industry each putting up £1,000 on average per car, is one option being mooted, say government insiders. The rationale for industry funding is to prevent taxpayer subsidy simply replacing discounts already being offered by manufacturers.

But the industry’s main trade body, which has been lobbying for a scrappage scheme to try to reverse a big slide in demand, said a state subsidy of only £1,000 a car “would not work”. “If it’s a question of whatever the government puts in, the industry has to put in, effectively the government is saying: ‘You’re bleeding, but you have to buy your own bandages,’” said Paul Everitt, chief executive of the Society of Motor Manufacturers and Traders.

“For them to agree something that’s a damp squib in the marketplace would be a disaster for the industry [and for] the government. A scrappage scheme should help us revive the industry, not help us sink it.”
Mr Everitt said the industry was willing to give “an undertaking not to reduce the overall level of incentives in the marketplace”, to reassure ministers the taxpayer would not be underwriting existing discounts. But he said the “mad” idea of requiring a fixed £1,000 industry payment for each model would force makers to sell some cars at a loss. Full story…