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May 18, 2009    

Ford and Honda delay participation in car scrappage scheme

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by Kay Murchie

The UK’s car scrappage scheme got underway today but it has been reported that Ford and Honda have delayed their involvement due to a dispute over VAT.

The scheme, which was launched to boost the fall in demand for new cars, pays consumers to get rid of their old cars and replace it with a more environmentally friendly car.

The scheme has proved successful in overseas, particularly in Germany who reported a 40% increase in new car sales for March.

However according to the Society of Motor Manufacturers and Traders, there are some issues which need to be resolved such as seeking clarification on who pays VAT on the vehicles.

Ford and Honda have both said they remain committed to the initiative despite the outstanding issues, with Ford saying it was confident it could begin sales “within a few days”.

Under the scheme, motorists will receive £2,000 when they scrap their vehicle (which must be at least 10 years old) with the Government contributing £1,000, with the remaining £1,000 funded by car firms.

The scheme will run until the end of February next year or until the Government funding runs out.

Approximately 12 million people are employed in the European car industry, with around 800,000 workers in the UK.

The British Chambers of Commerce (BCC) welcomed the scheme and told the BBC “it is exactly the sort of policy we need during a recession.”

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Tags: , , Ford, Honda, involvement, , scrappage, VAT issues