F&I Management & Training

Dealers and carmakers are considering how to administer the scrappage scheme across the UK after further information about how the Government-backed scrappage scheme was revealed.

AM has learned that there was concern among some volume carmakers that scrappage must apply to all vehicles in their ranges, including their least profitable entry-priced small cars.

However, the Department of Business Enterprise and Regulatory Reform (BERR) insists that carmakers taking part must apply the scheme to all models and derivatives. Those that don’t wish to, should not join.

Dealers have asked for clarification on administrative work required at point of sale and how quickly the Government’s share of the discount will be paid.The Government is giving £1,000 towards the cost with another £1,000 coming from the participating manufacturer.

Dealers will be required to check the old car qualifies for the scheme, and keep copies of the registration document, MoT certificate, certificate of destruction and invoice showing the £2,000 deduction.

A meeting on Monday between BERR and industry representatives, including the SMMT and RMIF, clarified many points but left some carmakers still undecided whether to join in.

Manufacturers should now have the finalised terms and conditions of scrappage.  Paul Everitt, SMMT chief executive, expects manufacturers to have decided whether to sign the contract by mid-May.

“This is good news for consumers that our industry is trying to make this as successful as possible.

“Everybody wants to provide the consumer with the best possible array of vehicles,” Everitt said.

The Government will pay the manufacturer within 10 days of the new vehicle being delivered and the old one scrapped. The manufacturer will then pay the dealer within another 10 days.

A manufacturer source told AM: “The Government understands the concerns about speed of payment. It doesn’t want this to be bogged down with administration.

"One reason that scrappage won’t apply to nearly new cars is because the Government offered to deal with 32 manufacturers rather than thousands of dealers.”

The source said BERR was unable to clarify the exact process for scrapping the old cars, or whether its £1,000 contribution was inclusive or exclusive of VAT.

In what was described as a “fairly involved meeting” of around 60 participants, BERR was questioned on the scheme’s requirement for the scrapped vehicle to have a valid MoT certificate.

“It was put to them that what if an owner has their car MoT’d, it fails and needs £400 of repairs to get through, they decide it’s not worth the work so decide to scrap it. Shouldn’t they be able to use the scrappage scheme?

“BERR’s response was that it did not want to take the repair business away from repairers. What they were effectively saying was that the owner must pay for the repairs and then scrap the car through scrappage,” said the source.

However, BERR is expected to allow a period of grace of around three months from when the customer places the order for a new car if the MoT on their old car ends during the interim period.

Key facts for dealer principals

• Scrappage scheme starts May 18, 2009, and ends once Government funding runs out or February 28, 2010, whichever is sooner.
• Minimum £2,000 discount must be applied on qualifying purchases if your manufacturer is participating.
• Discount applies only to purchases of any unregistered car or LCV (up to and including 3.5 tonnes) from participating manufacturers.
• Customers can include retail buyers, business users and small fleets.
• Dealers and manufacturers can voluntarily offer further discount on top from trading margin.
• Trade-in car or LCV must have been registered before August 31, 1999.
• Trade-in must have valid VED disc and MoT certificate, or SORN notification.
• Trade-in must have been registered in the UK to the customer for 12 months and the new car must be registered to the same person.
• Trade-in must be collected by the manufacturer’s authorised treatment facility and scrapped.
• Dealer must keep copies of registration document, MoT certificate and certificate of destruction of old car, and copy of invoice for the new car showing the £2,000
• reduction.
• The Government’s payment will be made within 10 days of the completed scrappage process to the manufacturer, who will pay the dealer within another 10 days.