The saying ‘better late than never’ has been used by new car importers to describe the car scrapping scheme introduced by government as part of next year’s budget. New car agents have been suffering from loss of business for years as the high registration tax and value added tax added on top of the price of a new vehicle has forced the majority of motorists to opt for a used vehicle imported from abroad.

Statistics issued last month by the National Statistics Office, showed that during the third quarter of this year only 35% of newly licensed vehicles were actually bought ‘new’ from Malta. A total of 2,697 ‘used’ motor vehicles were imported from abroad and registered for the first time during the same quarter.

Motorists have been opting for ‘used’ imported vehicles for more than two years and sales of brand new vehicles dwindled to the detriment of the environment, and the new car importers, obviously, who between them employ around 1,000 people.

Thus, the government’s decision to provide an incentive for motorists wishing to scrap an old vehicle and purchase a brand new vehicle could not come sooner enough. The success of the scheme, however, depends on the conditions imposed which vary significantly from similar schemes adopted by other EU member states.

In particular, the fact that the rebate depends on the c.i.f. (cost, insurance and freight) value of the new vehicle slightly defeats the scope of purchasing a small new vehicle which consumes less fuel and emits low amounts of emissions. For instance, people driving an old banger more than 10 years old might not be financially able to purchase a new vehicle due to the price being beyond their reach. Thus, people opting for a new vehicle with a low purchase price will receive a lower rebate for their scrapped vehicle. The scheme, therefore, favours people who can afford to spend more on a new car and benefit from the full €2,000 rebate. The scheme would have been more enticing, and environmentally friendly, had the €2,000 been granted to all vehicle scrapped irrespective of the value of the new vehicle purchased.

Moreover, people with a higher purchasing power are unlikely to have waited for government to introduce a vehicle scrapping scheme to purchase their new vehicle judging from the amount of vehicles imported from abroad. Being used, these vehicles naturally emit a higher amount of emission and consume more fuel, as a natural result of fair wear and tear, when compared to a brand new vehicle.

Initial reports suggest that motorists have welcomed the scrapping scheme and are actively considering exchanging their old vehicle for a brand new, low emission model. The fact that the Maltese love a bargain should ensure that the scheme will be a success and rapid uptake should induce government to extend the scheme beyond the 2,000 limit set and perhaps also grant the full €2,000 rebate for every vehicle scrapped.

After all, the scheme is intended for the benefit of the environment and removing older more polluting vehicles is one significant step in that direction.