Jaguar Land Rover has emerged as a beneficiary of the Government’s car scrappage scheme, figures showed yesterday.
The perception has been that only volume manufacturers would gain sales from the “bangers for cash” incentive which offers a £2,000 discount to owners of cars ten years old or more who trade them in for new models.
That, according to a report by the Society of Motor Manufacturers and Traders, is largely the case. Out of the 29,796 new cars sold under the scheme since it came into force in May, the bulk of the orders have been for small cars made by Ford (4,299 units) and Hyundai (4,664). But premium manufacturers such as Jaguar and Land Rover, with 66 registrations between them, are also benefiting. BMW has gained 273 sales under the scrappage scheme and its German rival Mercedes has put on 144.
The trickle-down effect to the premium sector has come as a “pleasant surprise”, the SMMT said yesterday. “We envisaged that the scrappage scheme would add to sales of lower-value, smaller-engined cars but it now seems that it is restoring consumer confidence generally,” a spokesman added.
The scheme, the cost of which is split equally between the Government and manufacturers, accounted for about ten per cent of the market in June and was credited yesterday for putting the brake on the slump in new car registrations.
They fell by 15.7 per cent to 176,264 units but the decline was the smallest since July 2008.
The figure was about 15 per cent better than the SMMT’s forecast of about 153,000 units but it still left sales over the first half of 2009 nearly 26 per cent down at 924,955.
Significantly, private sales – as opposed to company or fleet orders – rose (by four per cent) for the first time since November 2007.
“We are now beginning to see the positive impact of the scrappage scheme translate into new vehicle registrations,” SMMT chief executive Paul Everitt said. “It is working well and has encouraged a lot more people back into showrooms.
“SMMT expects the pace of improvement to increase in the coming months but we can already see the industry making steady progress on the road to recovery.”
Jaguar, which is due to unveil its long-awaited new XJ in London on Thursday night, saw sales fall by 19 per cent to 1,516 units last month and by 20 per cent to 9,118 on a year to date basis.
The Big Cat’s sales are being underpinned by demand for its Birmingham-built XF mid-range sports saloon, particularly the 3-litre diesel variant. With JLR’s Indian owner Tata Motors thought to be considering closing one of the company’s three assembly plants in response to one of the worst recessions in automotive industry history, the focus in the coming months will be the level of advanced orders its dealers book for the new flagship XJ.
Land Rover, heavily affected by the shift in the market away from big off-roaders, sold 2,105 vehicles last month, a fall of 28 per cent compared with the same month last year.
Sales for the first six months were 39 per cent down at 13,392, although the Lode Lane company was only just beginning to retreat from a three-year run of record sales at this stage of 2008.
Chinese-owned MG based at Longbridge registered 31 sales last month and 130 for the year so far, two of which were under the scrappage scheme.
Eric Wallbank, of Ernst & Young’s Birmingham-based automotive team, said the efficacy of the scrappage scheme was shown by the fact that private sales constituted half of the UK total compared with 40 per cent last year.
“Fleet and business sales are still suffering and have seen marked declines year on year – 28 per cent and 34 per cent respectively,” he said. “This suggests business confidence is still weak and whether this improves towards the end of the year remains to be seen.”
The UK scrappage scheme is less generous and came later than the incentives bankrolled by other major European countries. As Mr Wallbank said, in Germany, where eight-year-old cars qualify, June sales were 40 per cent up on 2008.
He answered critics who say that, because scrappage sales are largely confined to imported mini and super-mini class cars, the UK automotive sector was not benefiting. The majority of the engines in the top-selling Ford Fiesta and second-ranking Ford Focus, for example, are produced at UK plants, as are the four-cylinder engines that power Minis and BMW 3 Series cars.
Mr Wallbank said: “This underlines the importance and significance of the European-wide roll out of the scheme – albeit subject to differences in each country – which has created cross-border demand in all the major automotive manufacturing countries.”