Study suggest customers are waiting for a "scrappage scheme-like" inducement.
Almost one in three new car buyers is delaying their next purchase in the hope “scrappage scheme-like” government incentives will arrive soon. That’s the conclusion of new research by consumer motoring magazine What Car?, which found 29 percent of drivers were holding out for government-backed inducements before they choose their next vehicle.
The news comes after figures from the Society of Motor Manufacturers and Traders (SMMT) showed new car registrations were down 89 percent in May compared with the same month in 2019. It was the third consecutive month in which sales have fallen dramatically as a result of the coronavirus lockdown, which came in on March 23.
Although restrictions have been lifted to allow showrooms to reopen, What Car?’s data suggests the rush to buy a new car may not happen as quickly as some might hope. That said, What Car? claims speculation is growing over the possibility of a scrappage scheme-style incentive arriving in the UK.
France and Germany have already introduced similar stimulus packages to give their automotive sectors a leg-up. In France, the government has announced funding worth €8 billion (£7.2bn), raising the current electric vehicle subsidies from €6,000 to €7,000 and offering extra funding for makers of electric and hybrid cars.
In Germany, meanwhile, VAT for passenger cars was cut from 19 percent to 16 percent, effectively reducing prices overnight. That was one of a range of measures, which also included a new €6,000 subsidy for electric cars that cost less than €40,000. Whether similar policies will be implemented in the UK remains to be seen, but What Car? says its Target Price mystery shopper data shows some manufacturers are starting to slash prices on popular models by nearly 25 percent.
“Governments across Europe are introducing initiatives and incentives to protect and stimulate the automotive industry in the wake of the Covid-19 pandemic,” said What Car?’s editor, Steve Huntingford. “Despite growing speculation around a green scrappage scheme in the UK over recent weeks, nothing has yet been confirmed.
“While our research and web traffic data suggests demand is increasing in June, the industry will need support once the initial post-lockdown surge has subsided. Figures from the SMMT suggest we are heading for one of the worst years in history for new car sales, so a government-backed initiative to encourage motorists to trade-in older, higher-polluting models, could provide a welcome boost to the industry – just as the Scrappage Scheme did in 2009 after the previous year’s financial crisis.”