Jason Francis, Managing Director, Jaama made comment on the scrappage scheme and fuel duty:
“The launch of a scrappage scheme in a bid to kick-start new car sales is a big mistake and is hugely flawed in its logic. The scheme fails to address the fundamental problem in the motor industry, which is that too many cars have been produced for years and years. The production cutbacks seen in recent months have started to address that problem, but it is too little, too late. Consumers typically drive old ‘bangers’ because they can’t afford new or newer vehicles. The ‘scrappage’ scheme will only encourage some people to take on more debt and seek to obtain more credit, which they cannot afford and may find, is unavailable to them.”
“The Government’s decision to increase fuel duty by 2p a litre in September – potentially at a time when the UK is heading out of recession – is a disappointing move. The pump price increase will impact on company and fleet budgets at a time when they can ill-afford the additional costs and will also trigger inflationary pressures.”
Julie Jenner, Association of Car Fleet Operators (ACFO) Chairman also made comment on the scrappage scheme and the company car tax changes:
“We are disappointed that the scrappage scheme is limited to new cars and vans and has no environmental component that encourages the uptake of low emission vehicles. We had promoted a scrappage scheme that would have incentivised the purchase of vehicles up to four-years-old powered by engines that meet Euro4 emission standards and have a CO2 figure of 165 g/km or less. Such a scheme would have also had the benefit of protecting the residual values of defleeted company vehicles. We fear that by only including new vehicles within the scrappage scheme, demand for ex-company cars and vans will suffer as consumers turn their attention to new cars to obtain the incentive. This will obviously hit residual values. However, it remains to be seen how many consumers take advantage of the scheme. People who drive old cars typically do so because they just can’t afford a new vehicle. Even with the £2,000 incentive a new car will still be financially out of reach for many people.
“Aside from the scrappage scheme, the 2009 Budget will have a limited impact on fleets.
“We welcome the early clarification of the 2011/12 company car tax changes, which means that fleets and drivers can take the measures into account when making vehicle choices. However, we look forward to hearing more details on the long-term plans for benefit-in-kind tax from 2012 on both low emission company cars and on diesel cars, notably in relation to the possible abolition of the current 3% tax supplement and incentives for Euro6 emission vehicles at the earliest opportunity.”
Phil Moorhouse, Managing Director, Northgate Vehicle Hire had a positive response to the scrappage scheme, however, his views on the fuel rise were less optimistic:
“The Government’s decision to introduce a ‘scrappage’ scheme is a short-term measure that we welcome. It will help motor manufacturers, dealers and the wider motor industry including ourselves as we also benefit from increased demand. As well as stimulating demand for new cars and vans, the move will also lead to the replacement of polluting old ‘bangers’ with new vehicles equipped with the latest low emission engine technology and safety features.
“However, we are disappointed that the Chancellor has continued to pursue an agenda of fuel duty increases. September’s promised 2p a litre rise on top of the April 1 1.84p a litre increase at a time when all business costs are under tremendous pressure is in our view ill-advised. The Chancellor is adding costs at a time when businesses are finding it impossible to pass on that additional expense to their customers. Therefore, they will have to take the additional fuel costs on the chin and that will have a direct impact on profitability.”
Ross Jackson, Managing Director of Fleet Operations Limited reflected his disappointment in his comments concerning the Chancellor’s efforts:
“The Budget does nothing in the short-term to help the fleet industry or the majority of motorists – indeed they are likely to see their costs rise.
“The Chancellor’s decision to pursue an agenda of regular fuel duty increases – a 2p a litre rise is scheduled for September 1 meaning that duty will have increased almost 4p a litre this year – is another stealth tax at a time when fleets, company car and van drivers and private consumers can ill-afford the cost burden.
“Meanwhile, although the scrappage scheme may look like a marketplace stimulant at first glance it is unlikely to prove that in reality. Second-hand values of existing cars are likely to suffer as some motorists take advantage of the scrappage scheme. Thus the scheme will prove to be a cost burden for many, particularly fleets. Additionally, the fact that the £2,000 incentive is being split between the Government and participating manufacturers is likely to mean in reality that there will only be a £1,000 incentive (from the Government) with manufacturers and dealers wrapping currently available discounts into the incentive package.”