UK government to launch new car scrappage scheme
Buyers could get up to £6000 incentive to trade in their old petrol or diesel car for a new electric or hybrid version
The UK government is set to introduce a new scrappage scheme offering drivers discounts of up to £6000 to switch from petrol and diesel to electric or hybrid cars, according to reports.
The scheme is designed both to help boost the UK economy in the wake of the coronavirus lockdown and to encourage the take-up of vehicles that have lower carbon emissions. The government is already aiming to ban the sale of all new combustion-engined cars by 2032.
The new scrappage scheme was first reported by the Telegraph, with an announcement set to be made on 6 July, shortly after the third phase of lockdown easing is due to come into effect. Full details of how the scheme would work have not emerged yet.
The original government scrappage scheme was introduced in 2010 to boost the economy following the financial crisis. It was based on a £400 million pot, with buyers given £2000 off (£1000 from the government and £1000 from the manufacturer) for scrapping a model aged 10 years or older. Nearly 400,000 cars were bought under the scheme in 10 months. There was some controversy that all cars traded in had to be scrapped, including some roadworthy rare models.
The UK government currently offers a plug-in car grant of up to £3000 for anyone buying a vehicle that produces less than 50g/km CO2, has a zero-emission range of at least 70 miles and costs less than £50,000. But it axed incentives previously offered for buyers of plug-in hybrid vehicles.
The UK car industry has been pushing for a scrappage scheme after sales virtually dried up in April and May due to showrooms being forced to close. Encouraging sales of new cars would also help to boost production demand.
The move by the UK government to tie a post-lockdown economic stimulus scheme to low-carbon vehicles is similar to programmes introduced by both the French and German governments in recent weeks.
While plans to introduce a scrappage scheme will be welcomed, there are concerns in the industry that limiting any schemes purely to electric cars – which still account for a tiny proportion of the overall market – will limit the economic boost it will offer.
Speaking recently, Volkswagen sales boss Jürgen Stackmann said that the "automotive industry can be a powerful driver to help" boost the economy. But he added that any incentive scheme should not be focused purely on electric vehicles because of their relatively low sales.
“A scrappage or exchange scheme could be built around encouraging people into cleaner, modern cars,” said Stackmann. “There are talks to combine a scrappage scheme with a shift to e-mobility, which we can understand. But people need to understand that focusing only on e-mobility will not restart the economic engine.”
Daksh Gupta, the boss of major dealership chain Marshall, recently told Autocar that he thought there was "no question" that some form of stimulus package was needed to boost cars sales. He said: "Research from the last scrappage scheme showed that 91% of people that bought a car were people that would have absolutely not bought a new car otherwise."
Gupta said that his preference would be for some form of grant that would benefit all brands fairly, and cautioned the low margins manufacturers achieve on full electric vehicle sales would limit the effectiveness of a scheme that focused purely on such cars. He added: "Many manufacturers are selling EVs at a loss because of the cost of production, so we are trying to educate [the government] about the benefit of going with hybrid and EVs, or even Euro 6."
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