Industry Trend Analysis - Scrappage Will Not Be Market Saviour - NOV 2017

BMI View: The scrappage schemes currently being offered by the majority of brands in the UK market will not be enough to stem the decline in passenger car sales in 2017. Sales will instead continue to be driven down by the market's natural downswing in demand after becoming overheated in 2016 and intensifying consumer fears over Brexit and the erosion of real earnings .

We do not believe that new scrappage schemes being offered by a number of major brands in the UK will be enough to warrant an upward revision in our passenger car sales forecast for 2017. We therefore maintain our forecast for passenger car sales to decline 2.9% in 2017.

Since August 2017, the majority of major brands in the UK passenger car market have announced discounts on the purchase of a new car in return for the trade-in and subsequent scrappage of vehicles with only Euro IV or earlier emissions certification. While we acknowledge that these programs have a far-reaching footprint on the overall UK car market, we stress that the UK car market's overheated state as well as consumer anxieties over Brexit and weakening real purchasing power will outweigh the benefits of these schemes.

Generous Spread Of Discounts On Offer
Market Share Of Brands By Scrappage Schemes Offered, %
Source: SMMT, BMI calculation

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