Car Scrappage Scheme in the UK

5/19/2009

Two major car manufacturers are yet to go ahead with the United Kingdom car scrappage scheme due to reservations about some details.

Under the car scrappage scheme proposed by the government, cars that are older than 10 years can be scrapped in return for a £2,000 discount on a new model. The government will subsidise half of this £2,000 sum while the car companies will make up the other £1,000.

The scheme is the brainchild of the government’s Business Secretary Lord Mandelson. He has said that he thinks the £300m scheme will "provide a boost to the car manufacture industry and kick-start sales".

So far 38 car manufacturers have signed up to the car scrappage scheme following their success in other countries like Germany where a scrappage scheme boosted new car sales by 40%.

Car Scrappage Scheme in the UK

However, Honda and Ford are not entirely comfortable with the details of how the Value Added Tax (VAT) will be calculated. Honda has not registered any cars under the scheme.

A spokesman for Honda said: "In relation to the £1,000 contribution, the original request was for a contribution of £1,000 from the industry.
"We were looking at splitting that cost between the manufacturer and our dealers but we are being told that we cannot do that."

He added that they were being told that manufacturers alone would have to make up the payment, and Honda was challenging that.

Mr Kawasaki from Bristol , a wannabe S2000 drooling Honda owner, who part exchanged his fab 200,000 BMW says:

Its turning into a farce! I've placed an order with Honda for a new car taking advantage of the much publicised and hyped 'bangers for cash' car scrappage scheme only to be let down on the day because the government cannot commit to clear rules under which the manufacturers must operate. I have been told by Honda today that they have 'no idea' when it will be sorted, leaving me out of pocket on the deposit already paid and personal finance taken out on the basis of purchasing the car today. All in all, another episode courtesy of our incompetent government justifying their position in the next opinion polls.....rock bottom.

Meanwhile Ford has stopped vehicle deliveries to car dealerships.

A Ford spokesman said: "Based on details which have only become apparent late in these negotiations, Ford is working to resolve some outstanding administrative issues."
But both Honda and Ford say they remain committed to the scheme.

Clarification was being sought by the SMMT (Society of Motor Manufacturers and Traders) on the exact tax position.