Used cars included in new scrappage subsidy scheme

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A government decision to include subsidies for used vehicles in a scrappage scheme has importers of new cars fuming over the inclusion saying it defeats the purpose of protecting the environment from harmful emissions.

According to reports, the government is set to include a €1000 subsidy to encourage scrapping old cars in exchange for a nearly new car which complies with EU directives on reducing harmful carbon emissions.

Ministers have discussed an amended version of the proposed car scrappage programme at cabinet on Wednesday.

The proposal was tabled by Transport Minister Yiannis Karousos who announced that he is to meet the Association of Importers of Used Cars.

The new version includes a €1,000 subsidy for the replacement of vehicles aged over 15 years with used vehicles, which was not part of the initial scheme approved last November.

It provided only for the replacement of old bangers with new vehicles or electric cars.

Karousos said the reason behind the addition of used cars to the scheme is to enable lower-income groups to replace their old vehicles with cars with lower emissions.

The Ministry’s budget for the programme was set initially at €3 mln, of which €2 mln is earmarked for the withdrawal of an old car and replaced with a new car with a conventional engine meeting the emissions criteria.

The subsidy is €2,000 for new conventional vehicles, and €5,000 for new electric vehicles, with the latter instance not requiring the withdrawal of an old car.

The total budget for replacing an older car with a newer used one is €600,000.

Car owners replacing their older vehicle with a used electric car will benefit from a €2,500 subsidy. The budget available for the above is €250,000.

The car to be withdrawn should be at least 15 years or older, the age to be calculated from the date when the vehicle was first registered in any country as new up to the first day of the launch of the programme. It should also have been continuously registered for the last 10 years.

The new car should have a Euro 6AD or newer engine, which does not exceed 1,800cc. Euro 6 is the sixth incarnation of the European Union directive to reduce harmful pollutants from vehicle exhausts.

The Euro 6 standard was introduced in September 2015, and all mass-produced cars sold from this date need to meet these emissions requirements.

The aim of Euro 6 is to reduce levels of harmful car and van exhaust emissions, both in petrol and diesel cars.

Used cars to replace older ones must be imported and aged up to 3 years with a Euro 6 engine.

One month to apply

According to reports, the people interested in the scheme will have just one month to apply.

Applications must be submitted electronically via a Road Transport Department portal that is to be launched soon. According to Phileleftheros, applications will open sometime in February or March.

Approval of applications will be valid for seven months from the approval date, and subsidies will be paid out once owners submit the old car’s destruction certificate.

Disappointed with the turn of events, importers of new cars say that including used cars in the scheme will only defeat its objective.

“Scrappage plans across the EU aim to get old cars with high emissions off the roads and replace them with electric or cars equipped with the state-of-art technology which reduces emissions,” said Dickran Ouzounian, treasurer of the association.

He said the life circle of combustion engine cars is coming to an end, with the EU applying penalties to companies and governments alike for not adapting to directives.

He noted that currently, 70% of cars on Cyprus’ roads are second-hand vehicles.

He argued that including used cars in the scheme cannot be done in the name of consumers with smaller budgets as a vast majority of second-hand vehicle owners prefer used luxury cars.

The Association’s Alexis Anninos added that car importers are more disappointed with rumours suggesting the scheme was modified to keep car importers, of both used and new cars, happy.

“If this is to any extent true, and the aim is not to clamp down on CO2 emissions, then the association calls on the government to pull the plug on the scheme before it is even launched,” said Anninos

Green MP Charalampos Theopemptou told the Financial Mirror that he found the government’s move to include subsidies of used cars in the scrappage scheme to be a sound move.

“The aim should be to get older cars with higher pollutant emissions off the road, and not just encourage people to buy new cars.”

Theopemptou noted that used cars bought to replace older ones will have to comply with the environmental criteria in the scheme.

The former Environmental Commissioner said the scheme still lacked incentives for lower-income groups to replace their old cars for a new one as prices are out of their reach.

He argued the €2,000 cash incentive given for the replacing their older car, does not help poorer consumers who would need to dish out another €12-15,000.

The Transport Ministry was contacted by the Financial Mirror for more details on the scheme, but nobody was made available to comment.