The UK Government should consider a car scrappage scheme to help protect the country’s industry, according to several leading car makers.
Andy Barratt, managing director of Ford of Britain, has warned that without some form of incentive to stimulate the new car market it could be forced to end production at both of its UK factories.
Senior figures from Jaguar Land Rover and the owners of Vauxhall have also said some stimulus is needed to revive the market.
Ford is already set to permanently close its Bridgend plant later this year but as work resumed there and at Dagenham, Mr Barratt told ITV News: “It’s Ford's view that it is necessary we have stimulus in the market to help customers come back with confidence.
"That may be a scrappage scheme or something similar but without a doubt some sort of stimulus is really needed to get the car business moving in the UK. Without any degree of stimulus, there is no doubt we can’t keep the factories running on the UK demand levels as they are.
"Other countries are bringing stimulus in, so manufacturing and production will move elsewhere.”
The effect of the coronavirus restrictions have been devastating for the car industry. Virtually all production was halted around Europe and beyond, and March saw the worst new car registrations figures since 1946. New car registrations were down 97 per cent to just 4,321 as dealerships were forced to close.
Dealers in England have been allowed to resume remote sales and “click-and-collect” deliveries of new cars but industry leaders have said the market needs government intervention to help it recover.
Mr Barratt’s call for a stimulus package echoes that of Jaguar Land Rover managing director Rawdon Glover. He suggested that any government incentive had to benefit the entire industry from budget brands to luxury marques. He also insisted that the Government needed to move quickly, an incentive scheme should be in place by the start of July to help car dealers relaunch their businesses after lockdown.
Alison Jones, managing director of PSA, told BBC Newsnight that a CO2 emissions-based scrappage scheme was being discussed but suggested it should focus on new cars in lower price brackets, with industry and the Government sharing the costs. She also told Car Dealer that delaying a decision could damage the new car market. She said: “‘The first of July was a suggestion and is linked to the September car market, but what I would say is that any decision needs to be made sooner rather than later, because if customers think there is a stimulus package coming then that won’t help us in getting the industry started.
“If we’re coming out of lockdown there will be some pent-up demand... so you might think that there will be a little rally, but then it will get really difficult.”
A previous scrappage scheme was run in 2009 to help stimulate the car market after the financial crisis. It gave drivers £2,000 towards the cost of a new car if they scrapped an older model and helped to drive 400,000 sales in 10 months.
Calls to repeat the scrappage scheme in recent years have met with resistance amid fears they might not be cost-effective.