Motor industry calls for sustained government support

In a message delivered in a letter to chancellor Alistair Darling (pictured) ahead of the 2009 Pre-Budget Report, the Society of Motor Manufacturers and Traders (SMMT) asks the government to deliver on its current support measures and not increase the fiscal or regulatory burden on businesses if the UK motor industry is to sustain recovery. To allow the UK motor industry to recover and plan with confidence for the medium- and long-term, SMMT is calling for "a sustained and strategic approach to recovery from government". SMMT said the success of the Scrappage Incentive Scheme had been crucial to stimulating private demand throughout the second half of 2009 and it was vital that government did not impose measures that could deter private purchases at this critical time. The SMMT calls for government to: • Maintain the reduced 15% VAT rate into 2010 and phase-in gradually any increase to avoid a sharp fall in consumer demand. • Defer the third stage of increases to DVLA first vehicle registration fees. • Remove the 3% diesel car penalty in the company car Benefit In Kind calculation. The Society also called for financial and legislative burdens to be eased to help generate demand, especially for premium vehicles and in the hard hit commercial vehicle market. It asked that: • Commercial vehicle purchases be encouraged by maintaining and increasing the enhanced writing-down allowance to 60%. • The lifting of the expensive car cap (£80,000) in the company car tax regime to be reconsidered to remove the stigmatising effect on UK premium products during these difficult market conditions. • An exceptional enhancement be made to the Annual Investment Allowance, increasing it to £500,000. The UK had the potential to become a global leader in the development of and demand for ultra-low carbon vehicles, SMMT went on, but government had to show that the UK was an attractive option for inward investment by global automotive companies through promoting business confidence and its support for new technologies. To this end, it should: • Speed up the release of funds from the Automotive Assistance Programme. • Prioritise funding for the research, development and demonstration of technologies required to deliver future low carbon vehicles. • Maintain a consistent policy in support of alternative technologies and infrastructures being developed as part of low carbon vehicle strategies. • Continue consistent and durable incentive programmes for biofuels, ultra-low carbon vehicles and their associated infrastructures. In particular, government should urgently reconsider the removal of the 20ppl duty incentive for biofuels scheduled for April 2010 and consider enhanced capital allowances for ultra-low carbon commercial vehicles. SMMT chief executive Paul Everitt said: "The Pre-Budget Report provides an important opportunity to sustain the recovery and support the longer-term competitiveness of the UK motor industry. "It is essential that existing support schemes begin to deliver more quickly and help to encourage investment in R&D, skills and productivity. Measures that help to signal a long-term commitment to manufacturing and help to stimulate key parts of the market will boost business confidence and the attractiveness of the UK to inward investors."