SMMT News UK Manufacturing

The UK Scrappage Incentive Scheme – the facts

30 October 2009 #SMMT News #UK Manufacturing

The UK scrappage scheme has been very successful for a number of reasons. Here are the facts:

·         Over 181,092 new vehicles had been registered under the scrappage scheme by the end of September. There is an order bank of a further 80,000 vehicles.
·         Government and industry have set aside £800 million to support up to 400,000 vehicles going through the scheme.
·         The scrappage scheme is largely self-funding for government with the 15% VAT paid on a car bought for £7,650 covering the £1,000 government contribution.
Support for the UK motor industry:
·         Approximately one fifth of the cars registered were either built in the UK or have an engine produced here.
·         SMMT estimates that approximately 70% of the cars bought under the scrappage scheme represent additional sales which would not otherwise have happened in 2009.
·         Ford, whose engine plants in Bridgend and Dagenham employ 4,000 people, has introduced extra shifts triggered by the increase in demand from UK and European scrappage schemes. August output was up 36.5% at Dagenham and 18.3% at Bridgend, compared to 2008. Ford estimates that this has resulted in a positive knock-on effect for around 100,000 of their UK jobs in the sales, distribution and supply chain.
·         Nissan has said that production of the UK-built Micra and Note has increased by an additional 33,000 units due to scrappage schemes operating in the UK and across Europe.
·         In August and September, Toyota cancelled workshare to fulfil orders incentivised by the UK and European scrappage schemes. Toyota plans to return to the workshare arrangements in October. 
·         Honda introduced a third model, the Jazz supermini, at their plant in Swindon. The Jazz had been sourced from Japan and has reportedly made up 70% of Honda’s scrappage deals. Some 20,000 units are expected to be built in the current financial year (to end of March 2010), almost a fifth of Honda’s total Swindon output.
·         LTI, the Coventry based taxi manufacturer has reported that 20% of its sales since the start of the scheme have been as a result of scrappage.
The environmental case:
·         New cars registered through the scheme have an average CO2 value of 132.1g/km. This was 10.9% below the average of all new cars registered between May and September, of 148.2g/km.
·         The average car scrapped under the scheme is 12.6 years old with estimated CO2 emissions of 181.9g/km – 27.6% higher than its replacement.
·         72.7% of cars bought under the scrappage scheme were classified in the Mini or Supermini segments.
·         85% of a vehicle’s lifetime CO2 emissions come through use meaning the scheme is likely to save some 3.6m tonnes of CO2.
·         Pre-1999 vehicles will have a Euro 2 engine as standard compared to Euro 4 in new vehicles. These engines deliver more than a 50% improvement for harmful emissions.1
·         Compared to ten year old vehicles, new cars now have higher EuroNCAP ratings, more safety technology as standard and improved security features.
·         SMMT now forecasts the new car market to end 2009 at 1.928m units, over 250,000 units above our pre-scrappage forecast, but still well below the 2.47m unit pre-recession five year average.

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