RickT
18-05-2009, 03:53 PM
Car Scrappage Plan Stalls Amid VAT Row
Carmakers Ford and Honda have suspended the delivery of cars ordered under the new Government scrappage scheme amid a row over VAT.
It is hoped the £2,000 incentive will attract people into car showrooms again
The programme allows owners of cars and small vans more than 10 years old to get £2,000 off the price of a brand-new vehicle when scrapping their old vehicle.
Part of the cost of the scheme is shared by manufacturers.
However, the Society of Motor Manufacturers and Traders confirmed that some firms were now urgently seeking clarification on who pays VAT.
Business Secretary Lord Mandelson earlier hailed the scrappage scheme as a "wonderful bargain" for drivers and good news for everyone in the motor industry.
The scheme will last until the end of February 2010 or until the £300m Government funding runs out.
Lord Mandelson told Sky News: "It will not just be a great bargain for the motorists... but of course it will be a great boost for those hundreds of thousands of people who work in, or are dependent on, the car manufacturing sector in our country.
"So it is a 'win-win' all way round."
Such schemes have worked well overseas, particularly in Germany where new car sales soared 40% in March this year.
The UK industry is in need of a similar boost, especially as new car sales have fallen for 11 months in a row.
Although the UK scheme is voluntary, all the major carmakers have signed up for it and many are planning to continue their own sales incentives on top of the deal.
SMMT chief executive Paul Everitt said: "There has been a good response to the scheme ahead of the official start date and industry is confident that this will be translated into additional orders."
Unsold cars wait to be snapped up
Jon Pollock, of Britain's second largest car manufacturer Toyota, was also confident the new scheme will be as effective as it's been on the continent.
Mr Pollock told Sky News: "The scrappage scheme will bring incremental business to the market - and we're already seeing that.
"Is it the panacea to the economic crisis in the car industry? That's more debatable, but anything that does bring new customers to the market must be welcomed."
Last week price comparison company uSwitch.com said the £2,000 incentive would effectively be "lost" in depreciation within 88 days of consumers buying a new vehicle within the scheme.
Simon Harris, consumer editor of car magazine Parkers, believed the effect of depreciation made a nearly-new car a better prospect.
He told Sky News: "If you don't mind not being the first owner, there are plenty of deals around where you can get typically three, four or five thousand off a second-hand family car."
But the AA, which is one of a number of organisations backing the initiative, said depreciation analysis was irrelevant and misleading and that the scrappage scheme would benefit "hundreds and thousands of consumers"
Carmakers Ford and Honda have suspended the delivery of cars ordered under the new Government scrappage scheme amid a row over VAT.
It is hoped the £2,000 incentive will attract people into car showrooms again
The programme allows owners of cars and small vans more than 10 years old to get £2,000 off the price of a brand-new vehicle when scrapping their old vehicle.
Part of the cost of the scheme is shared by manufacturers.
However, the Society of Motor Manufacturers and Traders confirmed that some firms were now urgently seeking clarification on who pays VAT.
Business Secretary Lord Mandelson earlier hailed the scrappage scheme as a "wonderful bargain" for drivers and good news for everyone in the motor industry.
The scheme will last until the end of February 2010 or until the £300m Government funding runs out.
Lord Mandelson told Sky News: "It will not just be a great bargain for the motorists... but of course it will be a great boost for those hundreds of thousands of people who work in, or are dependent on, the car manufacturing sector in our country.
"So it is a 'win-win' all way round."
Such schemes have worked well overseas, particularly in Germany where new car sales soared 40% in March this year.
The UK industry is in need of a similar boost, especially as new car sales have fallen for 11 months in a row.
Although the UK scheme is voluntary, all the major carmakers have signed up for it and many are planning to continue their own sales incentives on top of the deal.
SMMT chief executive Paul Everitt said: "There has been a good response to the scheme ahead of the official start date and industry is confident that this will be translated into additional orders."
Unsold cars wait to be snapped up
Jon Pollock, of Britain's second largest car manufacturer Toyota, was also confident the new scheme will be as effective as it's been on the continent.
Mr Pollock told Sky News: "The scrappage scheme will bring incremental business to the market - and we're already seeing that.
"Is it the panacea to the economic crisis in the car industry? That's more debatable, but anything that does bring new customers to the market must be welcomed."
Last week price comparison company uSwitch.com said the £2,000 incentive would effectively be "lost" in depreciation within 88 days of consumers buying a new vehicle within the scheme.
Simon Harris, consumer editor of car magazine Parkers, believed the effect of depreciation made a nearly-new car a better prospect.
He told Sky News: "If you don't mind not being the first owner, there are plenty of deals around where you can get typically three, four or five thousand off a second-hand family car."
But the AA, which is one of a number of organisations backing the initiative, said depreciation analysis was irrelevant and misleading and that the scrappage scheme would benefit "hundreds and thousands of consumers"