It’s becoming clear just how poor this “scrappage incentive” is

The much talked about scrappage scheme, due to start 18th May, is starting to look like the 300lb gorilla in the room. Like we in the trade have been saying the only winners will be the likes of Renault, Peugeot, Ford etc who are desperate to shift metal and will probably just use the government subsidy to ‘top up’ the massive discounts they will already incentivise buyers with. Whilst late plate nearly new used cars are still thousands of pounds cheaper than new the cost to change, despite the meagre £2,000 total commitment, will still often be far more attractive than buying a new car on the scrappage scheme. Smaller, cheaper cars will be the only plausible cars that get the scheme going and they are the “go to” car in a recession anyway, so are selling reasonably well in any case.

The only people who we see benefiting from this “incentive” are older drivers who buy a new car once in a blue moon and wouldn’t dream of asking for a discount and possibly large families who will simply scrap the worst car in the family (the teenage driver’s), use the incentive against a new one for mum and dad and hand their old car down. By any standard these scenarios contain a narrow band of beneficiaries and with the recent news that has a survey for Parker’s Guide revealing that 81% of those questioned “would not be taking advantage of the scheme” then it’s certainly doesn’t look like the scheme will be as beneficial as was originally hoped.

Even scrappage scheme head cheerleader and SMMT Chief Executive, Paul Everitt is toning down his original enthusiasm.“We’ve been dealt the cards that we have,” he said. “Our job now is to make the best of it”. Doesn’t sound quite as enthusiastic now does he? And why would he? As usual with this government it’s all about spin without substance. By stipulating that participating manufacturers have to contribute 50% of the incentive they have really muddied the waters and just given the same manufacturers a PR and marketing tool and little else. It’s obviously confusing for most people and it will be hard for potential customers to discern whether they are getting anything over and above what they could have achieved anyway.

Presumably the government could easily have put in place a proper incentive and paid for it in extra VAT revenues but muddled thinking and half-baked measures have got in the way of a real stimulus package.

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2 Responses to It’s becoming clear just how poor this “scrappage incentive” is

  1. admin May 15, 2009 at 3:39 pm #

    ‘Consumers have already shown great interest in the Vehicle Scrappage Scheme, with dealers reporting a marked increase in enquiries since the scheme was announced in the Budget in April. Following the launch of the scheme on Monday (18 May 2009) we are confident that the scheme will provide a boost to the sector, and enable thousands of UK motorists to buy a new car,’ said Sue Robinson, Director of the Retail Motor Industry Federation (RMIF), which represents 8,000 businesses that sell, service, and repair new and used cars, commenting on the launch of the Vehicle Scrappage Scheme.

    Under the scheme, owners of vehicles registered before 31 August 1999 will receive a £2,000 discount on a new car or light commercial vehicle if their old vehicle is scrapped. The scheme will run until 28 February 2010, or until the £300m allotted by the Government to fund the scheme is exhausted.

    Robinson adds: ‘The scheme has the backing of motor retailers, and the sector is looking forward to the influx in custom that the scheme is likely to bring.’ (autowired)

  2. Cameron May 16, 2009 at 9:14 am #

    Lets see how many of those ‘enquiries’ generate actual sales. I think the extra traffic so far is purely from people wanting some clarity over what the scheme actually offers. It seems the only positive commentry for this scheme so far has come from individuals who have not had to regard buying a car as a major purchase for years, if ever. They are in a tiny minority. It will be intreresting to know the figures at the end of this month of genuine new sales that have been generated from the scheme. Remember too that it ends in 10 months!

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