The Irish car industry is seeking the reintroduction of the scrappage scheme for older cars to stimulate the market and reduce emissions as part of Ireland's commitment to the Kyoto protocol. Car sales are currently down 6.5 per cent on last year, writes Michael McAleer.
According to Michael Herbert, president of the Society of the Irish Motor Industry (SIMI), while the removal of Vehicle Registration Tax (VRT) is an aspiration, the SIMI would see definite benefits from introducing another scrappage scheme.
Herbert describes the previous scheme as "a win-win-win situation for consumers, government and the industry".
The earlier scheme was introduced in July 1995 and ran until December 1997, and about 64,000 car owners availed of it. Cars aged 10 years or over were scrapped, with the owners availing of a £1,000 vehicle registration tax refund on the purchase of a new vehicle.
"Under the last scheme consumers got cheaper cars, distributors and dealers supported the initiative by offering further discounts, and benefited from the added stimulus to the industry, while the Government made a net benefit on each car sold of about £1,700," says Herbert.
"Then there's the environmental benefits: emission levels from cars of 10 years or older are 30 times more than from a new car. Ireland is under pressure to meet its commitments to the Kyoto Protocol on emissions and this would go some way to improving our situation."
The proposal could be structured to offer €1,500 tax rebate on cars of 10 years or over, and €1,000 for eight year-old cars. While the proposals are being put to members, initial reaction is positive, according to Herbert.
"The scrappage scheme stimulated the industry in the past and at the moment the trade is in a downturn and needs another kickstart. Next January the volume of 10 year-old cars and older will be the same as it was in July 1995 when the previous scheme was started."
The National Car Test (NCT) has improved the state of our national fleet, says Herbert but you cannot force 10-year-old cars to lower emissions. "It would be wrong to use the NCT to penalise those with the older cars rather than offering them an incentive to upgrade and dispose of their older car."
While the timeframe for the proposal has not been agreed yet, it is likely that SIMI will propose a one year scheme with the possibility of extending it for a further year.
However, Samantha Breen of the NCT expressed some doubt as to the benefits of reintroducing such a scheme.
"The introduction of car testing was aimed at helping car owners to hold onto their cars for a little longer and we have certainly seen a lowering of the fail rate in the cars tested since the scheme began.
"We would consider the Irish fleet relatively young compared to some of our European counterparts, and the test has improved the condition of these cars so that people can hold on to them for a good while longer."
According to the Department of Finance, they receive upwards of 200 budget submissions every year and declined to comment on the likely outcome of the SIMI proposal.