The motor industry says a car scrappage scheme will generate jobs and taxes. Critics say it’s a short-term strategy, bad for the environment. And politicians say . . . different things.
THE CAR DEALERS
'A scrappage scheme is very important for our jobs, our income and our survival'
Gabriel Keane of Windsor Motors has let 150 staff go over the past 18 months and 300 others have had wage cuts or are on short time. "A scrappage scheme is very important for our jobs, our income and our survival," he says. "It's all about the next 12 months. Once we get into 2011 we will be in a better place – at least, that's the hope."
He insists the green agenda will be well served by any scheme. "Customers are coming in now and are looking only at the green cars; the ones with the lowest emissions and those that attract the lowest car tax. That is completely new and a complete U-turn for consumers."
He describes the past 18 months as "horrendous" and adds "we have lost a lot of very good people, people who will struggle to find any work out there. It's a tough place to be but we have no real choice but to try and stick it out and survive as best we can."
Alan Nolan of the Society of the Irish Motor Industry says the scrappage scheme is "about survival and jobs". He says 10,000 jobs have gone this year and warns that if nothing is done to stimulate the sector, the same number will go again in 2010.
"It is about sending a message to an industry which employs tens of thousands of people that we are beginning to move into a better place, to give employers the confidence to carry their staff through next year. We're not talking about reinflating a bubble: quite the opposite, in fact, because at present the market is artificially low."
He points out that Government revenue from car sales has fallen by €1.5 billion to €500 million. "What we are proposing will give the opportunity to regain some tax. The average car generates €7,000 in revenue for the Exchequer so if it gives back €2,000, the State still has €5,000 to collect."
THE POLITICIANS
'Remember that there are many sectors of society that are suffering'
Ciarán Cuffe, a Green Party TD, is unconvinced a scheme is desirable or necessary. While he's not entirely opposed to its introduction, he says it would need to "stack up on both economic and environmental grounds" and claims it "will be hard to make it stand up on both counts. How does helping car dealers boost the smart economy or knowledge economy?" he asks.
He accepts the industry has been through a tough period but says so have many other sectors of the economy.
"There are other areas that we could look at. We could, for instance, give people vouchers for weekend breaks in Ireland – that would increase tax revenue from a range of goods and services and stimulate a sector of the economy. Investment in education would also give a good return for the Exchequer."
He describes the Society of the Irish Motor Industry as "very well organised", and says it is "important to remember that there are many sectors of society that are suffering and they are not as well organised or as well funded".
Fianna Fáil TD for Wexford, Seán Connick, who has a background in the motor trade, says there is "no logical reason" to oppose a scrappage scheme. He claims it would be "win-win all the way, from an environmental and economic perspective".
He points out that at least €1 billion has been lost in tax revenue following the collapse of the new car market. He says 10,000 jobs in the trade have gone this year, "and 10,000 more are hanging on by their fingernails".
He favours other plans including Government-subsidised flights into Ireland to promote tourism, but says the scrappage scheme is the simplest.
"I think the Minister for Finance wants to introduce it and I believe he's been testing the water . . . I'd say the chances of it being introduced are around 70/30 in favour and I'd be very disappointed if we couldn't swing it."
THE ENVIRONMENTALISTS
'I believe the motor industry is the last one we should be stimulating'
David Maher of the Dublin Cycling Campaign thinks the idea is dreadful. He points to the negative impact on the environment of the manufacturing of new cars, and expresses concern that people who own cars with small engines might buy cars with bigger engines. "The motor industry is not pushing this for the benefit of the environment or the economy as a whole. It is for the benefit of themselves."
The scheme will "just encourage people to bring forward purchases they were going to make anyway", he claims. "If you're in a hole you should stop digging and I believe the motor industry is the last one we should be stimulating. I'm not surprised the people behind this are from Fianna Fáil – it is so typical of that party; they want easy short-term and populist solutions to everything."
James Nix of the Irish Environmental Network says a scheme would not represent good value for money for taxpayers.
"Most of the money that would be spent would go abroad to the car manufacturers. We'd be better off trying to spend the money locally by working out ways to improve efficiency at home."
He suggests schemes to assist people to install wood-burning stoves and better home insulation, which would have a long-term gain. He says an "abrupt rush to car showrooms and a spike in employment that would last only two years before car sales fell back again" would just create another bubble.
THE MOTORISTS
'I would prefer to buy anew car. If a scheme was introduced, I would'
Bernard Forster from Terenure in Dublin drives a 10-year-old Seat Ibiza and is facing an NCT next January. He knows that at the very least he will have to replace two tyres, get the brakes adjusted and the lights realigned. "It's going to cost me a fair bit, and to be honest I would much prefer to buy a new car. If a scrappage scheme was introduced, that is certainly what I would do."
He has his eye on a Honda Jazz and is still holding off. "I really believe something needs to happen to realign the prices north and south of the Border. I would prefer to buy a car locally, but in the absence of a scrappage scheme or some price alignment it is hard to justify . . . I suppose it is just a case of wait and see what will happen next month."
Users of Twitter, when asked by The Irish Times, were most unconvinced. " Why do we need a scrappage scheme?" wondered David Kelly. "It's not like there's much of a car industry to prop up." Kevin Sammon agreed. He said if a new scheme was introduced it would lead to money leaking out of Ireland immediately. "We don't have a car industry in Ireland to protect. It's a waste of money." Alan Duggan, who drives a 12-year-old car, was equally dismissive. "If changing, I might go for a five-year-old car. Makes no sense to buy new even with a €2,000 incentive."
Helen Monaghan said there was nothing wrong with her 10-year-old car and added that even if there was she "wouldn't/couldn't pay the cost of a new one, even minus €2,000". Aoife Carroll was open to the idea and said she might support a scheme if "some environmental strings", such as low emissions, were attached.
THE GERMANS
Up to 90,000 car industry jobs are expected to go next year
Germany's car scrappage scheme worked like this: last January, the government set aside a €5 billion fund, doling out €2,500 in cash to any consumer who bought a new car and scrapped their nine-year-old banger. The cars were brought to the scrap yard and destroyed – or not. Police say they intercepted at least 50,000 "destroyed" cars on their way to eastern Europe and Africa – and this is widely considered to have been only the tip of the iceberg.
In total, around 3.3 million new cars were registered in the nine months of the scrappage scheme, around 26 per cent more than in the previous year.
There is dispute over what kind of cars benefited from the scheme: some say people bought small French and Italian runarounds, others say the bonus helped German companies empty their depots of unsold saloons.
Facing into 2010 without state subsidies, industry experts expect car sales to decrease by 12 per cent. Critics of the scheme claim the scheme didn't add sales, merely encouraged around 500,000 consumers to bring forward their purchase.
And they say the well-intended scheme had unintended economic side-effects. For example, garages have reported a drop in work, with fewer old cars needing repair.
Environmental campaigners have dismissed the "green" side-effect of the scheme: while they agree it is a good thing to swap old cars for more fuel-efficient newer models, the scrappage scheme made no new green demands on car companies or consumers.
As a German government report from 2007 points out, just a third of a car's environmental impact comes during driving, while two-thirds comes during manufacturing.
After the scrappage pot ran dry in September, a leading consulting firm warned that the scheme had postponed, but not prevented, the worst: up to 90,000 car industry jobs are expected to go next year, amid a 20 per cent collapse in demand for cars and a 40 per cent rise in car dealership bankruptcies.
- DEREK SCALLY
