Government instituted a scrapping allowance to reduce the numbers of minibus taxis ahead of the taxi recapitalisation plan and Wesbank chief executive Ronnie Watson says a similar plan should be executed to reduce the number of ageing cars on the road.
Government instituted a scrapping allowance to reduce the numbers of minibus taxis ahead of the taxi recapitalisation plan and Wesbank chief executive Ronnie Watson says a similar plan should be executed to reduce the number of ageing cars on the road.
Watson told that the move would not only be a major boost for road safety, but would also benefit and stimulate the South African automotive sector.
The roads had too many old and unreliable cars travelling on them, he was quoted as saying.
“We must do more than just cry about the deaths on our roads,” said Watson. “Government has led the way in tackling the problem of too many old vehicles on our roads with a scrapping allowance for taxis. Maybe we could look at that for passenger vehicles as well.”
Watson again called for a meeting between government, the financial sector and automotive manufacturers and retailers and the scrapping allowance was one idea that could be discussed. CARtoday.com reported recently that Watson suggested a meeting between the parties to discuss ways to improve vehicle affordability in South Africa.
He said that although it would cost money to pay for older vehicles to be scrapped, there would be benefits as well, not just in terms of the lives and injuries that could be saved.
Government would get a revenue boost if there was an increase in vehicle purchases, helped by a scrapping allowance for cars.
“There would be lower insurance claims, and the finance industry would be interested, as this would result in better value in the vehicle fleet. There would also be benefits for manufacturers and dealers from a better turnaround,” the report said.
McCarthy chief executive Brand Pretorius said South Africa’s total vehicle fleet, including commercial vehicles, was 6,5 million.
“The average age is 11 years. It used to be seven years in the mid-1980s,” McCarthy said. “The heavy commercial fleet is even older I would estimate an average of 14 years.
“Such a scrapping allowance will undoubtedly boost the market, as international case studies have shown,” Pretorius said.
He said that the cost to government of a scrapping scheme for cars would be cushioned by value added tax income, as well as other duties paid on importation of vehicles and components.
Watson also confirmed that he was about to submit a proposal to government that there should be more flexibility in the law on vehicle financing to allow more private leasing of vehicles as a way of making vehicles affordable.
This submission follows a similar one by the vehicle retailers’ association, the RMI.
