Importers are part-funding car scrappage

Car importers will be contributing €600 of the €2,000 rebate being offered in the new car scrappage scheme, in an initiative partially intended to boost car sales.

The incentive was announced in the Budget as a pro-environment measure but a sentence in the Government Gazette issued on Friday sheds more light on the initiative: “The scheme, which is also being partly funded by the agents/dealers of cars, is part of the government’s clean air strategy.”

One car importer was quick to issue a statement soon after its announcement on Friday that it was putting “its full weight of support” behind the initiative, which starts tomorrow. A total of 2,000 cars are being targeted for scrappage.

William Shaw, secretary of the Association of Car Importers in Malta (ACIM), confirmed that the importers were “contributing financially to make the deal more attractive”.

However, he refused to divulge the extent of the financial contribution, insisting it was not in the public interest to know.

“We are funding a percentage of the amount. We pooled in because it is beneficial for us and because we believe in this scheme which is giving people the opportunity to scrap their old car and replace it with a new one, and to receive financial assistance for doing so. Such schemes were introduced in many other European countries and the US,” he said.

A spokesman for the Finance Ministry said the government was only funding 70 per cent of the €2,000 limit on each car scrapped.

“The government is providing this grant to incentivise the public to buy a new, more environment-friendly car for their personal use and at the same time reduce the number of old cars from the road. This builds upon similar initiatives taken earlier to support the purchase of cleaner/smaller cars,” the spokesman said.

The system, only open to private individuals, pays a rebate of 15.2 per cent of a new car’s wholesale cost up to a maximum of €2,000 in return for a vehicle that is at least 10 years old. The car must have been registered up to last October 26, (when the scheme was first announced in the Budget) and all fees, licences and pending fines have to be paid.

The new cars bought cannot be longer than 4,460 mm and with emissions not exceeding 150g/km.

The scheme is meant to encourage the purchase of small cars but the parameters do not restrict the choice to city cars. Bigger and compact executive cars such as the Ford Focus and the BMW Series 1, as well as the Ford C-Max and the Citroen Picasso, fall within these parameters. Even the Peugeot 308, a small family car, is included in the list.

Importers of new cars have witnessed a slump in sales ever since many people started opting for second-hand vehicles imported from the UK and Japan.

Successive Budgets have helped importers improve sales through different initiatives, including the reform of car registration tax, which made new cars cheaper and second-hand vehicles more expensive to register.

Mr Shaw said importers were not planning to offer further discounts on new cars as they were already contributing to the scheme.

However, Muscats Motors is offering people a further €2,000 discount on BMWs and Minis.