Scrappage to scupper post-lockdown prospects for garages?

Published:  04 June, 2020

Independent garages expecting a surge in customer demand resulting from motorists being unwilling or unable to buy a new car in the wake of COVID-19 and post-lockdown uncertainty could soon have to contend with a scrappage scheme.

Car manufacturers and the franchised dealer sector are discussing with government a potential £1.5 billion scrappage scheme, The Guardian has reported. The proposed market stimulus package being hammered out in secret talks would see £2,500 taken off the price of a new car, with the aim to achieve an extra 600,000 sales.

Such a nationally sanctioned scheme ran in 2009 and led to 400,000 additional sales. Were scrappage to return, it would remove older cars that are serviced in the aftermarket from the road. They would be replaced with new cars more likely to be seen in dealer workshops for repairs and maintenance.

The scheme is likely not to discriminate between diesel and petrol cars, and EVs and hybrids. In correspondence between government and the SMMT, the trade body asserted that the scheme would need to “support the entire market, not just disproportionately favouring specific segments or technologies, recognising the diverse nature of UK automotive manufacturing”.

In a letter sent in May to Chancellor of the Exchequer Rishi Sunak and Business Secretary Alok Sharma, SMMT Chief Executive Mike Hawes said the “primary benefit would be in jump-starting the market, the sector and the economy without further drain on the public purse.”

However, the IAAF says a new scrappage scheme may not necessarily be the answer. IAAF Chief Executive Wendy Williamson said: “Motorists are currently under great pressure, and they should not be penalised for keeping hold of vehicles that are in good working condition and can continue to be serviced, repaired and maintained long into the future.

“If introduced, it could have a significantly negative effect on public mobility and the automotive aftermarket long term, especially as most of the vehicles eligible for the scheme will still be very much roadworthy.

“Not only is this unfair to consumers, but it is putting the aftermarket at great risk, as it will result in a direct decrease in the number of vehicles entering independent garages. With a newer vehicle parc, there is also a risk that VMs could potentially gain a monopoly on access to vehicle technical condition data, raising the question of data access.

“It’s crucial that any proposals are reviewed as the economic impact of a scrappage scheme could be detrimental to the aftermarket and place an unnecessary financial burden on the consumer.”

Wendy added: “With the forthcoming block exemption legislation renewal due in 2023, the aftermarket should have the same access rights as the franchised sector, providing the workshop is equipped with appropriate tools and equipment, thus creating a level playing field for all.

Just this week, franchised dealer showrooms opened on Monday (1 June), while today (Thursday 4 May) saw the release of the worst May new car sales figures since 1952.

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