Scrappage scheme boosts new car sales

Jun 16 2009 by Peter McCusker, The Journal

IN the first month of the used car scrappage scheme more than 60,000 orders have been placed for new cars in the UK with one North East dealer seeing weekly sales rise by 40%.

Japanese car maker Nissan, which had cut 1,200 jobs at its Washington plant when the recession bit at the start of the year, has recently responded to the increased demand by creating an extra 250 temporary jobs at the factory.

Business Secretary Lord Mandelson said: “Consumers know a good deal when they see one. These figures speak for themselves.

“Car manufacturers continue to report on the success of the scheme with rising sales. It is the boost that the industry needs“.

Newcastle Benfield Motor Group, which employs 1,100 people in the North East and has more than 25 outlets, says the scheme has led to a dramatic reversal in new cars sales.

Chief executive Mark Squires said: “It has made a tremendous difference. Before the scheme was announced new car sales were 10% down year-on year, but since the scheme started we have been up 40% every week.”

Nissan said that between April 22 and June 7 it had taken 2,383 orders from customers seeking to scrap their cars and earlier this month the company announced it was recruiting a further 100 staff on Wearside to help ensure it hit its target of making an additional 18,000 cars between June and September.

This followed an announcement in May that it was taking on a further 150 staff at the site to help meet increased demand due to the successful scrappage schemes on the continent.

Kevin Fitzpatrick, the Sunderland plant’s deputy managing director, said: “The short term spike in demand being delivered by all scrappage incentives is providing a valuable shot in the arm during a difficult period. Sunderland models – particularly smaller cars such as Note and Micra – are proving very popular with scrappage customers, although the market remains highly volatile.”

Nissan has also extended the scheme to include cars between eight and 10 years old which are exchanged for British built models including any new Micra, Note, Qashqai or Qashqai+2.

Mr Squires went on to say that sales at its Nissan dealerships had been particularly strong.

The scrappage scheme will run until March 2010 and to benefit from it, a buyer must have been the registered keeper, for at least 12 months, of the car that is due to be scrapped.

Half the scheme’s cash will be paid for by the government, with manufacturers contributing the rest. The government has set aside £300m to pay for the scheme, which could benefit up to 300,000 customers.

Industry body the Society of Motor Manufacturers and Traders (SMMT) said new car registrations in May fell at an annual rate of almost 25% to 134,858 units – the annual decline little changed from the previous month.

However, the SMMT was optimistic that an improvement could start to feed through shortly. A similar scheme in Germany helped to revive car sales.

Head of communications Nikki Rooke said: “I think, from our perspective, it's very encouraging that 60,000 people have placed an order for a new vehicle.

"It (the car scrappage scheme) certainly has had the desired effect in terms of getting that consumer interest back into the market again,” Rooke added.

Some consumers have questioned the efficacy of the scheme, saying better car deals can be found online than through a dealer using the scheme and others complain dealers are not passing on scrappage discounts.

PAGE TWO: MP's frustration over Corus sale