Scappage scheme drives motor industry growth
Nov 6 2009 by Iain Laing, The Journal
NEW car sales soared again last month as buyers continued to take advantage of the Government’s “cash for bangers” car scrappage scheme.
New registrations in October rose 31.6% compared with October 2008, with a total of 168,942 new cars being sold last month, the Society of M otor Manufacturers and Traders (SMMT) said.
SMMT chief executive Paul Everitt said: “October has seen this year’s biggest monthly increase in registrations, with the successful scrappage scheme accounting for over 20% of them.
“We have seen additional demand created by the extension of the scheme and customers wanting to avoid the VAT increase planned for January. Encouragingly, there has also been an increase in demand in the fleet and business sectors, which will be critical in sustaining recovery next year.”
The Japanese car giant said a week ago that production of Micras at its Sunderland factory has surged by 40% due to the scrappage scheme, but it is feared levels will dip again once the scheme runs out of money.
The success of the initiative – launched in April with £300m of Government cash, then topped up to £400m by Business Secretary Lord Mandelson – has helped to safeguard 350 temporary workers at Nissan until Christmas.
The company axed 1,200 staff in January due to the 20% year-on-year downturn in the global car market.
The October increase was the fourth successive month that sales have risen. The first monthly rise – in July – followed 15 successive months of decline.
Despite the encouraging October figures, sales for the year to date – at 1,685,981 – are still down 12.3% on the January-October 2008 total.
The motor industry had expected last month to see a rise in sales as new registrations had slumped 23% in October last year. But today’s rise was better than hoped for, with volumes almost 4% ahead of the 1999 to 2008 average for October.
Adrian Tink of the RAC, said: “These figures show why it was important to extend the car scrappage scheme.
“That said, the 31% increase is against the very dark days of last October’s figures.
“So while the figures are encouraging we shouldn’t get too carried away just yet. The acid test will be how sales react when VAT goes back up and the scrappage scheme ends.
“The real worry is that car sales will dip once again once the crutch of financial incentives are removed.”
These figures show why it was important to extend the car scrappage scheme.
