Auto suppliers boosted by scrappage extension

AUTOMOTIVE component suppliers have received an unexpected boost following the announcement by the Government that it is to extend the successful car scrappage scheme.

The scheme has been a major boost to the automotive sector at a time when it needed the business more than ever.

The decision to extend the scheme means manufacturers will have an extra month to try and entice motorists to trade in their old vehicle and receive a discount in return.

Motorists who have owned their vehicles for ten years or longer will remain eligible for the scheme although the Government has stipulated that no additional funding is being made available.

The scheme had been due to end this month but will now be rolled over until March, although no additional funding is being released by the Government.

This means that once the budget is spent then the scheme will end, whether it has run until the end of March or not.

The Government said the extension of the scheme would allow manufacturers and dealers more time to prepare for and operate an exit strategy.

Industry insiders have welcomed the scheme as a short term boost to the sector during recession. However, many feel the scheme has served its purpose and are happy to see its conclusion to prevent any further erosion of profit margins.

Also, while car dealers have seen new cars leave the showrooms in far greater numbers than they were expecting, the nearly new market has suffered considerably.

Many deals have been so competitive that nearly new vehicles have worked out more expensive than brand new vehicles.

Experts have predicted there will now be a surplus of pre-registered vehicles and that savvy buyers will be able to snap up real bargains in the months ahead, especially as the new registration months approach.

Component suppliers, who have benefited from the increased demand, could now be busier than they previously expected provided demand for new vehicles is such that significant volumes will be required to meet demand.

The decision to extend the scheme was announced by the Government yesterday following requests from car manufacturers for more time to prepare dealers and inform consumers.

Business Secretary Lord Mandelson said: “Against the background of the economic downturn the scrappage scheme has proved a great success, driving UK car sales, protecting jobs and supporting the supply chain for car manufacture at a time when this sector needed it most.”

In the final stages of the scheme manufacturers will be apportioned order quotas to aid an orderly close down.

By January 24, the scheme had been responsible for 330,722 orders being placed for new vehicles.

Manufacturers signing up for the scheme included: Bentley, BMW, Ford, Honda, Jaguar Land Rover, London Taxis International, MG, Peugeot, Rolls Royce, Toyota and Vauxhall.