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UK government considers £6,000 scrappage scheme

With the automotive market on its knees following record-breaking low sales during the peak of the nationwide lockdown, government is looking to implement a scrappage scheme to stimulate the market offering up to £6,000 off the purchase price of a new vehicle.

Electric vans already benefit from an £8,000 Plug-in Van Grant
Electric vans already benefit from an £8,000 Plug-in Van Grant

Prime Minister Boris Johnson is looking at repeating history and turning to a scrappage scheme to boost the automotive sector, much like government did in 2008-9 following the financial crisis of the time.

The scheme would see up to £6,000 offered off the purchase price of a new vehicle with a qualifying trade-in handed over for scrap. The scheme, should it be approved, would likely start in July. Concurrent to the scrappage scheme idea, others are calling for the same sum to encourage drivers to make the switch to electric vehicles.

Some reports, notably by the Telegraph, suggest the scheme would target the scrappage of petrol and diesel vehicles to encourage the purchase of an electric vehicle.

BVRLA chief executive Gerry Keaney said, “To be truly effective, any EV stimulus scheme must work for both the new and used market. It should make the UK a more attractive market for OEMs to sell their EVs and help those who cannot afford to buy a new electric car to purchase or lease a used one. Any scheme that focuses solely on supporting new vehicle sales could damage the residual values of ex-fleet cars and thus hinder the sector’s ability to invest in new electric vehicles.”

Other sources believe a scrappage scheme could be more wide-reaching, with electric vehicles already benefiting from the government’s Plug-in Car Grant that takes off £3,000 from the purchase price of a new electric car, and up to £8,000 for an electric van.

SMMT sales figures for the month of May showed a fall of 89% with just over 20,000 cars sold, with 163,477 fewer registrations than in the same month in 2019. The performance marked the lowest May since 1952. Private buyers accounted for the lion’s share of registrations at 63.7% of the market, equivalent to 12,900 units, while 6,638 cars went to fleets.

Similarly, LCV sales were down 74.1% in May to 7,541 units, despite demand for extra vans on many delivery fleets.

However, What Lease Ltd (trading as Lease Fetcher and What Lease) data indicated that since the Prime Minister’s launch of the recovery strategy on 11 May, there has been an uplift in demand. So much so, that demand is now parallel with pre-lockdown numbers in many cases, the company said. This could indicate that the government is biding its time before deciding upon the scrappage scheme to see how June sales figures progress, following the opening of most dealerships on 1 June.

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Written by Jonathan Musk

Jonathan turned to motoring journalism in 2013 having founded, edited and produced Autovolt - one of the UK's leading electric car publications. He has also written and produced books on both Ferrari and Hispano-Suiza, while working as an international graphic designer for the past 15 years. As the automotive industry moves towards electrification, Jonathan brings a near-unrivalled knowledge of EVs and hybrids to Fleet World Group.

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