THE GOVERNMENT has paid out €6.5 million this year on incentives involved in the scrappage scheme, with 4,500 cars bought under the scheme so far, according to the Revenue Commissioners.
Under the scheme, the Government refunds car dealers up to €1,500 off the VRT of a new car with emissions of 140g/km or less, namely in Band A or B, if a car of 10 years of age or older is traded in against it. This discount is then passed on to the buyer as a price reduction.
At the end of March, some 42,500 new cars were registered in the state, yielding €159 million in relation to VRT on new cars alone, with a further €125 million from VAT on new cars. Sales of new cars were up 31 per cent for the first three months of 2010.
It was reported recently that, due to industrial action by staff at the Revenue Commissioners, there was a backlog of claims leading to dealers being left with unpaid rebates. However, a spokesperson for the Revenue Commissioners has said that this is no longer a problem.
"There is no backlog, and all claims are processed within three days of receipt," the spokesperson told The Irish Times.
Director General of the Society of the Irish Motor Industry Alan Nolan said the scrappage scheme has had the desired effect on sales so far and the scheme is on target to produce about 10,000 new cars sales from scrappage sales alone.
“The scrappage scheme was always going to be important for the industry and it carried a message that it was okay to change your car. The numbers are in line with what was anticipated and, since it has been introduced it has had the effect of securing jobs and we are starting to see dealerships advertising for staff again.”
Nolan doesn’t believe that the industry’s problems are all gone, but hopes figures will start to return to normal.
“There is a real sense that the worst is behind the industry,” he said. “We are on course for sales of around 75,000 new cars this year and it hopefully won’t be long before we return to around 100,000 per year. With 4,500 cars sold under scrappage we are still on course to reach 10,000 cars under the scheme, as sales are spread out over the course of the year; more so than usual. Ae would expect another peak in sales before the end of the year, when the scheme ends.”
According to Ray Furlong, sales executive with Bolands in Wexford, the scrappage scheme has had the desired effect of getting customers into the showrooms. “We always want to sell more cars, so I don’t know if we would ever be happy with the numbers – but the scrappage scheme has definitely had an effect on getting people in the door who haven’t changed their car in a long time. It has definitely boosted showroom traffic.”
This is a sentiment echoed by general manager of Bandon Motors, Kevin Barry. “We have seen a boost in sales and the increase is about in line with what we expected. We are seeing people come in at all stages throughout the year so far as some people’s cars qualify for scrappage at different times.”
However, Barry is cautious about what will happen when the scheme finishes at the end of the year. “We have had customers in to buy under scrappage who haven’t bought since the last scheme,” says Barry.
“The problem is that the core of our sales used to come from the 20-30 year old bracket and they can no longer get finance and have very little equity in their cars. We might not see them again for 2-3 years. Finance is only operating at about 10 per cent of what it was 3 years ago.”