The motor industry calls for a scrappage scheme.

Britains largest rental company, Northgate Vehicle Hire, has joined the growing clamour for the Government to introduce a scrappage scheme to encourage businesses to replace ageing vehicles.

Northgate specialises in the supply of light commercial vehicles, and says companies and sole traders should be able to use the cash raised from scrapping their vehicle to fund a new model either by purchasing or alternatively through a flexible rental agreement.

Northgate Vehicle Hire managing director Phil Moorhouse believes Government introduction of a scrappage scheme will bring a range of benefits to the entire automotive industry and also help companies and small businesses such as plumbers, builders and carpenters that take delivery of new vans reduce operating costs, cut their carbon footprint and improve their fleet safety.

The motor industry has called for a scrappage scheme, which is already operating in a number of European countries, to be introduced in the UK to revive private and business demand for new and nearly-new vehicles.

The Government has so far yet to either formally support a scrappage scheme or exactly how one would function in terms of the financial incentives available to encourage owners to replace older vehicles with newer models.

However, scrappage schemes have already been introduced on the continent. In Germany, drivers get 2,500 (2,220) for trading in a car more than nine years old, while in France motorists can receive up to 1,000. Scrappage has also recently been introduced in Italy and Spain.

The Society of Motor Manufacturers and Traders has already called for a UK scrappage scheme to be launched that would allow both cars and light commercial vehicles over nine years old to be scrapped in return for a 2,000 cash incentive towards a new or nearly new vehicle up to 12 months old.

Mr Moorhouse said: A scrappage scheme should be introduced by the Government as it will stimulate economic demand for new and nearly-new vehicles; will reduce vehicle emissions as newer vehicles powered by cleaner engine technology would replace older polluting models; and newer vehicles are also equipped with all the very latest safety features to help drivers avoid crashes and offer improved protection in the event of an accident.

The SMMT has estimated that up to 250,000 cars and 30,000 LCVs could go through a scrappage scheme over an 18-month period if introduced.

Northgate Vehicle Hire operates a rental fleet of 65,000 vehicles and Mr Moorhouse said: If a scrappage scheme is introduced, businesses should treat the financial allowance as a cash injection to provide funding for the most flexible new vehicle alternative.

With the UK haunted by recession, the most financially astute businesses and sole traders could opt for a mini sale and rentback vehicle solution. This would initially see Northgate providing a new or nearly-new vehicle on a 10-month contract in place of the scrapped vehicle before the customer moved onto to our fully-flexible NORFLEX rental scheme.

He added: The credit crunch, which has led to recession, means that many small organisations and sole traders cannot obtain large enough loans to fund new vehicles. However, a scrappage incentive could be just the cash injection needed that provides a springboard to help these smaller businesses move into modern vehicles.

Not only will the introduction of new models help these companies reduce their vehicle emissions and simultaneously cut their fuel bills, but they will also be operating safer models. In addition, businesses would save on the service and maintenance costs associated with running older vehicles.

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