Scrapping scheme not required

The British Government will attempt to stimulate its car industry by offering consumers a £2000 incentive to trade in an old car in favour of a new one. But Australia's Federal Chamber of Automotive Industries believes such a scheme isn't necessary here.

Despite calls by the Motor Traders Association recently to adopt the concept that has already proven successful in Germany (more here) FCAI chief executive Andrew McKellar tells the Carsales Network there are already a number of initiatives being undertaken by the Federal Government; although he didn't rule out such a move later on.

"From the industry point-of-view here we continue to monitor the situation in the market," McKellar says.

McKellar singled out the government's proposed 30 per cent Investment Allowance that is designed to stimulate car buying by businesses. That proposed legislation is designed to give business a 30 per cent deduction off the price of a new vehicle and will run between December 2008 and June 30 this year.

"We are urging its speedy passage through the parliament at this point," McKellar says.

But McKellar admits there is still work to be done to entice more private consumers back to dealerships. The latest VFACTS sales figures show the Australian industry is down 20 per cent on this time last year. Although conceding there is "no magic bullet" to fix the downturn McKellar said the FCAI will remain in talks with the government to try and stimulate the local industry.

"Obviously we remain concerned about the underlying strength of the market and we continue to monitor that," he says. "There will be on-going discussions with the government."

But he also admits the implementation of a scrapping scheme could prove too expensive for Australia and may not translate as successfully as it has done in Europe.

The British plan calls for half the money from the government and the other half provided by the car industry. Although it has earned support from the industry the plan has also outraged others because unlike other schemes in Europe there is no requirement to buy a more fuel efficient vehicle.

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