Despite the Good Start Will the Government’s Support Prove Too Little Too Late

A morale boosting set of initial sales figures have put smiles on the faces of UK car manufacturers and dealerships, as an increased number of consumers have flocked to showrooms since the Car Scrappage Scheme inception. The Government Business Secretary Peter Mandelson said the £300m initiative had “got off to a flying start” and was “winning all round.” Furthermore, on Friday 29th, Mandelson reminded consumers of the Scrappage Scheme’s budget limit by saying “If you don’t wish to be disappointed, get your orders in soon”. The scheme has been designed on a “first-come first-served” basis as a catalyst to expedite sales on

According to Government statistics, 1 in 5 car sales had been purchased through the Car Scrappage Scheme since commencement on May 18th 2009, which was acknowledged as an encouraging sign by Paul Everitt, Chief Executive of the Society of Motor Manufacturers and Traders (SMMT). “With the scrappage incentive scheme fully operational, the industry is optimistic about the positive impact this will have on the market and on UK production facilities,” declared CEO Everitt, who also added “Despite the current difficulties, the UK must prepare for the return of global growth and government support for the industry is an essential part of the process”. Despite the initial increase in car sales, it will only be in July 2009 when June’s sales figures are released, that the industry could draw a full conclusion as to how effective the Car Scrappage Scheme is having on the UK car industry.

However, Nikki Rooke SMMT’s Head of Communications expressed concerns of emerging issues regarding difficulties in obtaining finance loans for the new car purchase, which was probably being influenced by the global credit crunch problems.

Anxiety continues to spread as U.S. car manufacturing General Motors’ announced that it may declare chapter 11 bankruptcy. Worries are escalating at UK manufacturer Vauxhall Motors, a GM subsidiary, as around 5,000 jobs are now at risk. Rumours are rife about the fate of Vauxhall’s plants in both Ellesmere Port and Luton. However, a deal has now been concluded in Germany where Canadian auto parts maker Magna will take over Opel, another European GM business, which secures tens of thousands of jobs. German Finance Minister Peer Steinbrueck told reporters that the takeover will be financed by a Russian bank in conjunction with Russian automaker GAZ.

We have previously highlighted on CarScrappage.co.uk that despite the entrepreneurial skills shown by car dealerships as they began creating their own scrappage deals while the Government procrastinated, it was essential the UK motor industry received the full support from a diligent Government. One of the main concerns now is whether the Government’s support may fatally prove too little and too late.

Check out Vauxhall deals at http://www.carscrappage.co.uk/car-scrappage-deals.