The Irish motor industry has received a shot in the arm with a new scrappage scheme on cars 10 years or older.
Announced in the Budget, the scheme will allow motorists who trade in their 10-year-old cars or older for a new car in the VRT bands A and B (ie with CO2 emissions of 140g/km or less ), receive tax relief of up to €1,500 in accordance with certain criteria.
Interestingly, of the 57,100 new cars sold so far this year, about 66 per cent had emissions that would qualify under the scheme.
The scheme has received a warm reception from the motor industry, and is seen as a welcome measure to protect jobs in the sector in 2010.
The Society of the Irish Motor Industry (SIMI ) estimates the increase in sales here will be between 10,000 and 20,000 new cars. New car sales will end the year under 58,000, down well over 60 per cent on last year.
Of the approximate 150,000 + cars on the road that could qualify for this discount, it is difficult to put an educated estimate on how many will end up availing of the scheme.
The previous scrappage scheme which was in operation from July 1995 until the end of 1997, accounted for up to 35,000 new cars sales.
It will be introduced with effect from January 1, to run until December 31 2010.
* Must have been registered in the state in the name of the purchaser of the new car for at least 18 months previous to the date of scrappage,
* Must be 10 years old or more from the date of first registration,
* Must be scrapped after December 9, 2009,
* Must be scrapped within 60 days of the date of the new car being registered, or have been scrapped within the previous 60 days of the date of the new car being registered, provided the date of scrappage is after December 9 2009,
* Must have a valid NCT certificate of roadworthiness, or one that has expired no more than 90 days prior to issue of the Certificate of Destruction; or documentation to indicate that it has been presented for and failed an NCT roadworthiness test in the previous six months;
* Must have been insured for use on the road for at least 12 months in the 18 months prior to the issue of the Certificate of Destruction.
The definition of ‘scrapped' means that the old car has been taken to an official End of Life Vehicles (ELV ) authorised treatment facility and a Certificate of Destruction is issued by the facility in respect of the car.
Society of the Irish Industry director general Alan Nolan described the scrappage scheme as a “welcome lifeline to the ailing motor industry”.
“It gives our members an incentive to offer to customers who, this time last year had little cause for confidence. We compliment the Minister on implementing this creative policy which will support jobs, encourage customers back to dealers’ forecourts, while at the same time boosting Government coffers.”
Ford Ireland gave also gave a warm welcome to the announcement. “The Minister has to be commended on the new scrappage scheme which will be a boost to employment in our industry,” said Eddie Murphy, chairman and managing director of Ford Ireland.
“It will also bring significant environmental benefits as older, more polluting cars will be taken off the road in favour of frugal, ultra-low emission models like our Ka.”
Adrian C Walsh, Fiat Group Ireland MD, commented: “I am delighted that finally there is a stimulus package for the Irish Motor Industry.”
Kia Motors Ireland was out of the blocks early, booking the important www.scrappage.ie web address to boost its marketing efforts for the new government scrappage scheme.
“A huge amount of research for scrappage will occur online and this unique URL will benefit us in this regard in terms of both organic searches and search engine optimisation,” commented Kia Motors Ireland head of marketing Aidan Doyle.
Other auto related elements of the Budget
We all welcome the VAT rate reduction from 21.5per cent to 21per cent, which is effective from January 2010. This brings it back to the level it was at before the ill-advised increase a year ago.Interestingly, the VAT rate in Northern Ireland goes back up on January 1, so the current difference of 6.5per cent will come down to 3.5per cent.
The existing VRT exemption for series production electric vehicles and the VRT relief of up to €2,500 for series production plug-in hybrid electric vehicles, both of which were due to expire on December 31, 2010, are being extended for two years until December 31 2012.
The one negative in the budget is the introduction of a carbon tax which was introduced at the equivalent to €15 per tonne. In layman's terms that means 4.2 cents being added to a litre of petrol and 4.9 cents to a litre of diesel. The tax which will be imposed on home heating oil, coal and peat has been postponed to next year.
The move has been roundly criticized and will give an added incentive for motorists to cross the border, adding petrol and diesel to their shopping lists