Will a scrappage scheme have the desired effect?


The idea of paying car owners cash sums to scrap older cars in an attempt to stimulate the new car market and remove inefficient, environmentally unfriendly cars from the roads has met with stiff resistance in the US from trade organisations. It is however being considered over here, after similar schemes have been launched elsewhere in Europe and there is growing optimism that it could really make a difference to sales figures. The opposition to the proposed US “cash for clunkers” scheme appears to be along the lines of a loss of revenue for repairers of older cars, parts suppliers and bodyshops who would all clearly be affected as generally newer cars are serviced and maintained at franchised dealers. This would obviously leave a large amount of independent repairers with less opportunity to gain business. The other argument, of course is that the plan seems to revolve around older cars which are not always necessarily the dirtiest or most damaging to the environment. It may be that a better idea would be to classify what cars are scrapped by a mixture of their age and their emissions rating, meaning if an older car is not environmentally unfriendly then it doesn’t get scrapped. This would have the positive affect of leaving enough older cars on the road to need repairing, M.O.T tests and bodyshop work along with ridding the planet of uneconomic gas guzzlers and replacing them with newer more efficient versions. In theory this should enable car makers to crank up production and dealers to sell new cars again.

In Germany car sales at dealerships have apparently received a boost as a result of the introduction of a new government scheme to trade in old vehicles for new which was launched in January.

Under the scheme cars have to be owned for a year to participate and German car makers association VDA has welcomed the government initiative to issue certificates worth Euro 2,500 (£2,300) for those who scrap cars over nine years old.

However, it is doubtful that the scrappage scheme as it is currently described will do that much for new car sales directly in the UK. If it applies to motorists whose current car is 10 years old or older and they receive say a £2,000 “voucher” towards a new car the demographics tell us that the owners of these cars are more often than not on low incomes and an extra £2,000 towards a new car will not see them heading to the nearest showroom. Let’s face it, if they do decide to put this £2,000 down as a deposit on a brand new car the chances of them securing the necessary finance on the remainder in the current economic climate is, perhaps, remote. Someone driving around in a ten year old car is, in all probability less concerned about the environment and more concerned with putting food on the table and keeping a roof over their heads. That said any scrappage system would be a step in the right direction and may “oil the machinery” in that the person getting rid of their 10 year old car will buy a newer car from a seller who then goes on to buy a newer car and so on but only time and experience will tell us.

Obviously the details, if the scheme goes ahead, will have to be studied carefully but anything that may have any positive impact on new car sales will be welcomed by everyone in the trade.

[poggler – a motor vehicle that has had loads of body filler to hide rust holes and dents..
“…that motors a right poggler …….. “
]


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2 Responses to Will a scrappage scheme have the desired effect?

  1. Times Online March 14, 2009 at 5:03 pm #

    Lord Mandelson is preparing to put a £2,000 bounty on used cars in an attempt to stimulate the motor industry.

    Senior government sources said that talks were at an advanced stage and a deal could be announced in the Budget on April 22.

    Under the proposed stimulus package, drivers would be able to turn in their car, which must be at least nine years old, and get a £2,000 discount on the purchase of any new or one-year-old car bought at a dealership in Britain.

    The motorists would have to deliver their old vehicles to one of a number of car recycling plants and receive a confirmation certificate. They would present this to a car dealer and get the government-funded £2,000 discount. Motorists would be able to purchase any brand of car.

  2. David Reed March 17, 2009 at 4:55 pm #

    This is an initiative with no drawbacks as far as I can see – it will cost virtually nothing thanks to the increased VAT generated, will give vital stimulation to a key UK industry, and will take old snotters off our roads, replacing them with much greener and more economical cars.

    Yet still the Government procrastinates and dithers. To help chivvy them along, we have started a petition at http://petitions.number10.gov.uk/scrappagescheme/. If you care about the automotive industry, please sign the petition now – if we can get enough signatures on there by April 22nd, Alistair Darling will be compelled to include it in his Budget.

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