In­dus­try wins with a scrap

NT News - Motoring - - NEWS -

GOV­ERN­MENT in­cen­tives saved Europe’s new car sales from obliv­ion last year, but fore­cast­ers warn of un­cer­tain times ahead.

In Aus­tralia, gov­ern­ment in­cen­tives lim­ited the crash in new car sales from an ex­pected 25 per cent to 7.4 per cent last year, but in Europe they kept sales to just 0.7 per cent down on 2008.

While our in­cen­tives were a tax break for busi­ness, the Euro­pean gov­ern­ments of­fered a va­ri­ety of scrap­page pro­grams which gave cash bonuses to buy­ers to get rid of old cars.

But in­dus­try an­a­lysts JATO Dy­nam­ics warns of tough times for the car in­dus­try when scrap­page sys­tems end.

It says sales in Ger­many shrunk 4.6 per cent in De­cem­ber af­ter it closed its scrap­page in­cen­tive scheme which hade con­trib­uted to a 23.9 per cent an­nual rise.

This com­pares with a 72.9 per cent drop in Latvia which did not have a scrap­page scheme.

The Aus­tralian auto in­dus­try last year called on the Gov­ern­ment to use a scrap­page sys­tem that in­cludes re­cently used cars.

How­ever, Fed­eral Cham­ber of Au­to­mo­tive In­dus­tries boss An­drew McKel­lar this week said the gov­ern­ment’s busi­ness in­cen­tive had been ef­fec­tive and there was no need for an­other scheme to take its place af­ter it ex­pired at the end of last month.

It is es­ti­mated that 80,000 ve­hi­cle sales were the re­sult of the Gov­ern­ment’s stim­u­lus pack­age.

‘‘The tax break wasn’t tar­geted at the car in­dus­try but at smaller gen­eral busi­ness across the board, none­the­less that did have ben­e­fits for the car in­dus­try in­di­rectly,’’ McKel­lar said.

‘‘The tax break has been ef­fec­tive, but re­al­is­ti­cally we are not in a po­si­tion now where the gov­ern­ment is likely to con­tem­plate new and ad­di­tional mea­sures.

‘‘The scrap­page sys­tem worked well for Europe but it has to recog­nised that it is an ex­pen­sive po­lice mea­sure that may be not sus­tain­able.

‘‘In Aus­tralia we have a more sus­tain­able eco­nomic pro­file, rid­ing out the worst of the down­turn in de­mand.

‘‘Hope­fully we are now in a po­si­tion where pri­vate buy­ers are com­ing back into the mar­ket and we can con­sol­i­date, pro­vided eco­nomic re­cov­ery con­tin­ues to give mo­men­tum.

‘‘The key thing now is that there is a bal­anced and pro­por­tion­ate re­sponse in mon­e­tary pol­icy and no in­ter­est rate rises too rapidly which could shake off the early re­cov­ery.’’

An­a­lysts be­lieve Euro­pean scrap­page schemes as­sisted sales of small cars more than big­ger more ex­pen­sive ve­hi­cles.

Newspapers in English

Newspapers from Australia

© PressReader. All rights reserved.