Scrappage: How the numbers stack up for rethink
MOTOR chiefs will tomorrow hold a ‘summit’ to put the year so far into perspective and raise key issues that affect the industry.
They will do so against a backdrop of an increasing belief across the industry that the scrappage scheme should be extended for another period.
It is due to finish at the end of December but there are arguments now being made that a further six months would benefit consumer, industry and the Exchequer.
While no one in an official capacity at the Society of the Irish Motor Industry (SIMI) is prepared to say anything at this stage, it is known that the success of the scrappage scheme so far – with around 10,000 new cars bought specifically within its ambit – is prompting a reassessment of its potential to sustain jobs and sales a bit longer.
That is the positive side. On the negative side lies the fear that the consumer sentiment it engendered may fall away and possibly lead to a scenario where fewer cars will be sold next year than in 2010.
That would have serious implications, especially for employment.
It is generally accepted that the current scheme, brought in by Finance Minister Brian Lenihan in the last Budget, has ringfenced thousands and thousands of jobs in the industry and averted a blood-letting similar to the one that drove so many from their employment last year.
In contrast, a number of outlets, on the back of the effects of Mr Lenihan’s measure, employed or re-employed more people this year.
Tomorrow’s summit includes a number of items for discussion. They include the current market, a new statistic service and our registration plate system, among others. But it is likely that the ‘scrappage scheme’ and ‘impact on jobs’ items will dominate.
Last night, SIMI’s director general Alan Nolan – who will host the event with the society’s president Eddie Murphy – declined to comment on any discussion about a possible extension of the scheme.
Among the key statistics likely to be rolled out tomorrow is the 48pc increase in new-car sales so far this year. At the moment sales are running at just above 75,000, compared with 51,000 for the corresponding period last year. Indeed, the total for all of last year came to a mere 57,400.
However, while the figures across the board appear to make a good case for some sort of extension, there is strong opposition to the idea and concept of such a scheme.
Obviously there are criticisms that a sizeable chunk of the money people spend on cars goes out of the country and that the scrappage measure has only encouraged people to borrow or spend when they might have spent or borrowed less for a used car – or waited a year or two.
The overwhelmingly favourable argument for an extension is the preservation of jobs. It is argued that whatever loss the Exchequer may have incurred in forgoing revenue has been more than outstripped by the salvation of employment and a proportionate increase in tax income from the strong rise in sales overall.
It is unlikely that anything will emerge to clarify the situation for some time. The industry is caught in something of a dilemma in that it could do with an extension but if one is announced then sales for the remainder of this year could fall off as people wait for a 2011 registration.
It is going to be an interesting autumn.