Car dealerships hope for boost from scrappage

Greece?s car dealerships are expecting a scrappage scheme, which will come into effect in the next few days to give their flagging businesses a major boost.

Speaking to Skai TV, Giorgos Vassilakis, the head of Greece?s car importers? association, said the dealerships are hoping the measures will help them overcome a ?tragic? 2010, when sales were down by almost 50 percent.

The government said last December that drivers of cars that are 12 or years old or more will be able to take advantage of the scheme and earn a discount of up to 2,800 euros on the purchase of a new vehicle.

PASOK hopes that the measure will boost its tax revenues, which have been flagging in the automobile sector. Figures released earlier this week by the Association of Motor Vehicle Importers and Representatives (SEAA) indicated that new car sales in November fell 63.4 percent year-on-year to 6,771. The October drop in new car sales reached 57.8 percent, following a 66.6 percent reduction in September.

The scheme will apply to cars purchased before December 31, 1998 and will remain in effect until the end of next year. However, the savings will only be available to consumers who buy new cars with an engine capacity under 2,000cc.

According to the plans, someone trading in an old car and purchasing a new one with an engine capacity of between 901 and 1,400cc would gain up to 960 euros through tax exemption. Those buying cars with an engine capacity of 1.4 to 1.6 liters will gain up to 1,430 euros. The incentive rises to 2,100 euros for cars that have engine capacities of 1,601 to 1,800cc. Anyone buying a car with a 1.8 to 2.0-liter engine can save up to 2,800 euros.

The government also hopes that by tweaking the price bands for luxury tax on cars, it will boost sales, particularly of mid-range cars. A luxury tax of 10 percent currently applies to new cars sold for between 15,000 and 20,000 euros. Under the government?s plans, this 10 percent rate will instead apply to cars costing between 20,000 and 22,000 euros.

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