The car making industry has warned that government plans to introduce a car scrappage scheme in the forth-coming Budget could do more harm than good.
Chancellor Alistair Darling has indicated that a scheme offering £2,000 vouchers towards replacing vehicles that are more than nine years old may be announced on April 22.
However, according to reports, the government is looking at requiring car makers to match state funding with each party putting in £1,000 - supposedly to prevent the government subsidy just replacing the discounts already being offered by manufacturers.
The industry’s trade industry body, the Society for Motor Manufacturers and Traders - which has been lobbying for the initiative with the backing of the Birmingham Post, said a state subsidy of only £1,000 would have no discernible effect and could absolutely make life even more difficult for manufacturers.
Chief executive Paul Everitt said: “If it’s a question of whatever the government puts in, the industry has to put in, effectively the government is saying: ‘You’re bleeding, but you have to buy your own bandages.
“For them to agree something that’s a damp squib in the marketplace would be a disaster for the industry and for the government. A scrappage scheme should help us revive the industry, not help us sink it.”
The car scrappage scheme is just one initiative that could revive the ailing car industry that came out of the Birmingham Post’s Auto Summit at the ICC in March. The scheme has already been introduced in counties across Europe with great success including in Germany where subsidies of 2,500 euro are offered towards new cars with the UK and Poland the only two major economies so far holding out.