Government must use Budget to send ‘buy now’ signal

26 March 2009 #SMMT News

In a letter to chancellor Alistair Darling ahead of the 2009 Budget (22 April), the Society of Motor Manufacturers and Traders (SMMT) has urged government to seize the opportunity to send strong ‘buy-now’ signals to kick-start demand in the new vehicle market.


In addition to ongoing calls for improved access to finance and credit and a scrappage incentive scheme to stimulate demand, the motor industry is calling for further measures aimed at increasing sales across the car and commercial vehicle markets. They include:


·         Removing or delaying the planned 2010/2011 introduction of a first year rate of tax on new cars.

·         Increasing the Annual Investment Allowance for businesses to £500,000 to boost spending on vans, trucks, construction equipment, buses and coaches.

·         Enhancing the Reduced Pollution Certificate discount for trucks, buses and coaches to incentivise the purchase of Euro 5 vehicles through reduced VED rates.

·         Deferring the new CO2-based business car capital allowance regime to 2010/11 to avoid tightening the squeeze on cash flow for business car users.

·         Delaying the introduction of the new standard Benefit-In-Kind (BIK) tax regime for the use of demonstrator and stock-in-trade cars to ease the unplanned cost adjustment burdens facing many employers and employees.

·         Removing the 3% diesel car penalty in the company car BIK calculation.

·         Deferring the third stage of increases to DVLA first vehicle registration fees.

·         Encouraging enhanced vehicle replacement in government departments and agencies in 2009 and 2010.


 “The UK motor industry is reaching a state of emergency and the rate of government action is crucial to the future success of the sector,” said SMMT chief executive Paul Everitt.


“The UK is home to highly productive and globally competitive plants producing vehicles that win market share around the world.  Government has an opportunity to support UK manufacturing as a key global player in the low carbon future but immediate action is needed to protect the country’s industrial capability.

“Government must use the Budget to boost consumer confidence and kick start the market with a scrappage incentive scheme to encourage private sales and tax changes to generate business sales,” he continued.


Notes to editors:


1.       In February 2009, SMMT made a formal proposal for a scrappage incentive scheme to the Department of Business, Enterprise and Regulatory Reform (BERR) at the request of business secretary Lord Mandelson. The proposal would incentivise owners of cars and vans over nine years old to scrap their vehicle in accordance with the European End of Life Vehicle directive in exchange for £2,000 towards a new or one-year-old car or van. The vehicle scrapped must be fully taxed, insured and MOTd and have been registered to the existing owner for at least one year.

2.       At €20bn, the automotive sector is Europe’s largest investor in R&D, driving industry forward and helping deliver more sustainable motoring for the 21st century. Technological innovation has helped car and CV manufacturers slash CO2 and air quality emissions from vehicles. New diesel cars for example emit 95% less soot from the tailpipe than those made 15 years ago and average new car CO2 has been cut by 17% since 1997. The energy needed to produce each vehicle is down 12%, water use is down 9% and waste to landfill is down 25%, compared to 2006 performance.  CO2 emissions per vehicle produced have fallen 14% in the last year and by 45% since 1999. Almost 10,000 tonnes of waste have been prevented from entering landfill sites. For more details, download SMMT’s ninth annual Sustainability Report from the SMMT website

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