Blow for car industry as scrappage scheme to be parked
THE car industry was dealt a blow last night after it emerged the Government is unlikely to extend the car scrappage scheme.
Despite pressure from representatives of the sector, Government sources told the Irish Independent there is little appetite to extend the scheme into 2011.
The scheme, which offers vehicle registration tax relief of up to €1,500 for those eligible, was introduced in Budget 2010 after the industry went through turmoil last year.
Yesterday, the Society of the Irish Motoring Industry (SIMI) said it was seeking the extension to the scheme which is due to end this year.
So far this year, the scrappage plan has contributed to better sales than expected.
When it was introduced in the last Budget, the SIMI predicted new car sales this year would top 70,000 but already more than 75,000 cars have been sold with 85,000 expected by year end. By the end of July 74,111 cars were registered, of which 10,472 were through the scrappage scheme.
A government source said yesterday: "If you look at the way the schemes operate in other countries like Germany and the UK, they were introduced for a set period to boost the market. By their definition, these schemes are time specific and I can't see how it would be any different here."
A spokesperson for the Department of Finance would not be drawn on the issue.
SIMI president Eddie Murphy said a continuance of the scheme into the first-half of 2011 would help sales.
"An extension of the scrappage scheme into the peak buying season in the early part of next year would be hugely beneficial."
Mr Murphy added that new car sales up to the end of July had generated €470m in VAT and VRT, up €70m on last year.
The car industry fears that a discontinuation of the plan could lead to a slump in new car sales next year and the closure of further dealerships after the downturn in the economy led to the closure of 100 dealerships and the loss of 100,000 jobs last year.
Earlier this week, the Irish Independent revealed that Cashel Motors had closed, owing creditors millions.
It was the second car dealership to close in a month after McKeon Motors in Co Meath also went bust.
"Some companies going (bust) in recent weeks show the fragility of the sector," said Alan Nolan, director general of SIMI.