Scrappage Scheme Delivering for the Country

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With four months of the year now gone SIMI believe that it is appropriate to review the progress of the Scrappage Scheme to date. Commenting Alan Nolan, SIMI Director General said, “With one third into the year gone 5,000 Consumers have already benefitted from the Scrappage Scheme refunds. Although there was some delay in processing the payments this did not affect consumers as dealers passed on the benefit of the refund to customers and it as dealers who had to wait for the delayed payments.
At this stage it is clear that the Scrappage Scheme is yielding the results we had predicted last Autumn.  The Government is to be commended for having the foresight to support this scheme which is now paying back even more than could have been anticipated.  We had predicted a win-win outcome but the results are certainly ahead of expectations at this stage.
·                           Thousands of good local Jobs have been Saved in every town in the country.
·                           An additional €60 Million in VRT and VAT has been generated from new car sales even after subtraction of Scrappage refunds.  
·                           Savings of c.20,000 Tonnes in CO2 this year alone as car buyers have made more environmentally responsible buying decisions.
·                           Consumers have benefited from excellent value due to strong competition as well as increased vehicle safety.

How Has Scrappage worked so far?
In our Pre Budget proposals last year, SIMI outlined that Scrappage would deliver benefits in protecting employment, generating additional tax revenues and in reducing CO2.  SIMI also predicted that a Scrappage Scheme would stimulate the market beyond the number of cars actually sold under the Scheme.  This has turned out to be the case.  Approximately 5,000 Scrappage Scheme Cars have been recorded to date while overall new car sales have increased by 13,744.

1.  Reduced C02 emissions

· Year to Date average C02 emissions for New Cars have reduced by 15.5gms/Km

>          1st Jan to 30th April 2010 average C02 emissions 135.14

>          1st Jan to 30th April 2009 average C02 emissions 150.63
Category A & B cars (scrappage scheme cars):

–          75% of all new car sales 1st Jan to 30th April 2010

–          57% of all new car sales 1st Jan to 30th April 2009

Total potential Environmental savings is likely to be in region of 20,000 Tonnes of CO2 in a full year.

2.    Increased Government Revenue

·      The additional 14,000 new cars sold through have generated additional €60Million between VAT & VRT even after accounting for VRT refunds.  This is a huge boost to Government Tax revenues.

·         Estimated VRT Take – €195Million (Net of Refunds)

·         Estimated VAT Take – €165Million

·         TOTAL – €360 compared to €300Million in 2009

3.   Save Jobs and Stimulate the Economy

·    Without a Scrappage Scheme the New Car market in 2010 would have stagnated with the prospect of thousands more job losses in the Motor Industry to follow the 10,000 lost in 2009.  With the improved trading situation since Scrappage was introduced these jobs have been secured.

·         We have not seen business closures which dominated last year and some companies are now beginning to recruit new staff for the first time in over two years.

·       The Motor Industry is a barometer for the economy, it was the first sector to be badly impacted in the current recession and is now the first to show strong recovery.  This has significance for other sectors of the economy and on RTE’s Prime Time Minister Lenihan singled out the Scrappage scheme results as a sign that the economy was seeing a turnaround.

·         New car sales have a knock on effect to other sectors.  In his report “Strategic Review and Outlook: the Irish Motor Retail Sector” issued last year, economist Peter Bacon noted …”the motor sector is not a stand-alone entity but interacts creating demand in other sectors… The main sectors affected are transport services, post and communications, insurance, real estate, computer services and other business services… It is notable that the main impacts all fall on service sectors where employment ratios tend to be high”

4.    Improved Vehicle/Road Safety

·        New cars are fitted with hugely improved safety features with multi-Airbags, Seatbelt pre-tensioners, ABS brakes, power steering, ESP, Isofix child seat anchorages, improved pedestrian protection etc. These make a major contribution to reducing road accidents, deaths and injuries and are significantly safer than the old cars they replace.