The Society of Motor Manufacturers and Traders (SMMT) has held talks with the government over a possible £1.5bn scrappage scheme, to reduce the price of vehicles and drive sales.

This is according to an article in The Guardian, which quotes a letter sent to chancellor Rishi Sunak from SMMT chief executive, Mike Hawes. In the letter, Hawes claimed the primary benefit of the scheme “would be in jump-starting the market, the sector and the economy without further drain on public purse”.

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Despite calls from campaigners for industry bailouts to be linked to environmental targets, Hawes said the scheme “must support the entire market, not just disproportionately favouring specific segments or technologies, recognising the diverse nature of UK automotive manufacturing”.

However a scrappage scheme incentivising the purchase of petrol and diesel vehicles could be detrimental to the government’s current Road to Zero 2035 emissions target.

Richard George, head of oil at Greenpeace UK, told the Guardian: “If the government is going to bail out the car industry, then every penny should go to supporting the transition to clean electric vehicles. People have noticed and enjoyed the cleaner air we’ve seen during the lockdown.

“Ditching petrol and diesel for electric cars and vans would improve air quality for good, with huge benefits to our health and environment, as well as putting Britain’s car industry into the 21st century and securing a future for its workers.”

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Elsewhere, other industry leaders, including the bosses of BP and Heathrow, wrote to the government to say that bailouts “can and should be aligned with the UK’s legislated target of net-zero emissions by 2050 at the latest”.

Hawes added: “The effect on underlying consumer confidence will be unclear and we may need to work with government to identify ways of boosting demand, especially given the contribution this sector makes to the economy and jobs. That time is not now but industry, and government, need to be prepared for all eventualities.”