F&I Management & Training

A war of words has broken out between the SMMT and Parker's, the used car consumer guide, over the cost of financing a car under scrappage scheme deals.

In a report on its website entitled 'Buyers fail to save under the scrappage scheme due to increased finance offers' Parker's said it had "found a number of examples from different manufacturers where the buyer will end up paying more than the original list price by the time their finance agreement comes to an end."

High APR rates
The guide accused some carmakers of hiking their APR rates and singled out Renault, Skoda and Peugeot as the main offender.

"Manufacturers with rates normally around 3.9 per cent and 5.9 per cent APR pushed their rates up as high as 8.9 per cent APR when used with the scrappage incentive," said chief executive Paul Everitt..

Terse rebuttal
The SMMT issued a terse rebuttal pointing out that car brands in the UK were obliged to contribute half the £2,000 cost on each deal, unlike other European markets where the schemes are totally government funded, which restricted the level of discounting offered by dealers.

"In some cases, where manufacturer profit margins are low, they are not able to offer additional incentives which may still be available on non-scrappage models and this may be reflected in the finance arrangements," he said.

"The very nature of purchasing goods on credit means that any consumer will ultimately pay a higher price for that product."

Lack of clarity
The SMMT said the Parker's piece lacked clarity because it failed to provide details of the amount paid above the on-the-road price for non-scrappage purchases and did not or detail the higher deposit values which would be needed to obtain the lowest possible APR rate.

"The Parker's report does not allow for an open and fair comparison of scrappage and non-scrappage purchases."

Parker's response
However, Parker's has responded by robustly defending its original story.

"Our aim is to highlight that the government has made it more difficult for manufacturers to make a success of the scheme by requiring match-funding," said Parker's editor Kieren Puffet.

DATED: 16.06.09

FEED: MT