Scrappage Scheme
Scrappage Scheme to help Car Buyers
If you drive a car that’s more than ten years old – you could take advantage of £2,000 off the list price of a new vehicle
Chancellor Alistair Darling has announced a £2,000 incentive to drivers of vehicles aged ten years and over in the 22nd April Budget.
A new £2,000 ‘scrappage scheme’ is now available to owners of vehicles aged 10 years plus following Alistair Darling’s 22nd April Budget.
Designed to give the motor industry a boost and to encourage car drivers out of older more polluting cars and into more environmentally friendly vehicles, the scheme announced by Darling in his Budget speech has received mixed reactions from the motor industry.
The scrappage scheme sees car drivers receive £1,000 from the government and £1,000 from the relevant manufacturer, although the scheme is voluntary, towards the purchase of a new car. The £2,000 incentive for car drivers to scrap their old car and buy a new one has been kept simple with all the necessary paperwork and the scrapping of the old vehicle undertaken by the dealer.
Do you qualify? The Scrappage Scheme facts can be found here…
Some motor industry commentators believe the scheme will give the motor industry a kick-start in a similar way to the schemes in Europe, particularly in Germany where new car sales soared when it was introduced. Others believe it simply isn’t far-reaching enough. On the other hand, elements of the green lobby are disappointed that more has not been done to encourage drivers to opt for more environmentally friendly vehicles.
In the run-up to the Budget, consumers appeared to be in favour of a scrappage scheme with a survey undertaken by the Society of Motor Manufacturers and Traders (SMMT) reporting that 76 per cent would back such an incentive. According to the SMMT, which welcomed the announcement of the scheme, the number of cars in the vehicle parc over ten years old to the end of 2008 was 9,528,582 and the number of light commercial vehicles was 993,731 which means the impact of the scheme, set to kick off almost immediately on 1st May, will soon become apparent.
SMMT chief executive Paul Everitt said: “This is good news for consumers and will get people back into showrooms, kick-starting demand in the market. The scheme recognises the economic value of the motor industry and we are determined to make it a success.”
An online survey in the UK undertaken by J.D. Power and Associates highlighted similar thinking with two-thirds believing a government-backed scrappage scheme would stimulate the new vehicle market. More optimistically, the survey revealed that 40 percent of all respondents with qualifying vehicles would be either “likely” or “very likely” to purchase a new vehicle within the next six months as a direct result of the incentive.
As a result of the new government incentive measures, J.D. Power and Associates forecasts an increase between 100,000 and 150,000 units in new-vehicle sales in the UK.
More information on the JD Power and Associates survey can be found here…
The incentive was welcomed by the Retail Motor Industry Federation (RMIF), which represents 8,000 motor sector businesses that sell service and repair new and used vehicles, as ‘good for business and good for consumers’.
Commented RMIF chairman Paul Williams: “The introduction of a vehicle scrappage scheme for cars aged ten years and over as announced in the Budget will boost the new car market, encourage consumers to get back into car showrooms, and reduce the likelihood of employee downsizing in this sector.”
Richard Mason, managing director at Motoring.co.uk, said: “This scheme is the shot in the arm the industry needs to boost new car sales. With a limited budget and a deadline of March 2010 to claim, and recognition of the fact that some desirable cars have a waiting list of up to nine months, now is the time to act to take advantage of this attractive offer.
“The limited time period will focus the minds of consumers forcing them to act now if they want to capitalise on the scheme. If the Government is planning on investing £300m into this scheme, matched by the industry, only 300,000 cars will be eligible to claim an incentive, this would suggest that we have around 4 to 5 months before the budget is exhausted.”
The Green Car website, however, had wanted to see a cap on CO2 emissions for new cars eligible under the scheme.
The website’s editor, Faye Sunderland said: “Without setting a limit on the CO2 emissions of the new cars bought under this scheme, it makes a mockery out of the government’s said commitment to developing this country as a leader in green motoring.”
Her sentiments were echoed by the Environmental Transport Association’s director Andrew Davis: “To describe this scrappage scheme as environmentally friendly is not just greenwash, it is hogwash. Many 10-year-old-cars have plenty of life left in them, so from a climate perspective, to scrap them is money poured down the drain.”
WhatGreenCar, however, has calculated what it has termed a ‘modest’ reduction in CO2/km as a result of the scrappage scheme. Based on the announced car scrappage scheme of £2000 for cars more than 10 years old, WhatGreenCar estimates that the average carbon benefit will be over 50 gCO2/km per car. Assuming average mileage of 15,000 km per year, the carbon saving amounts to over 0.8 tonnes per year per car, or over 4 tonnes per car over the 5-year period during which time the scrapped car may have been used if the scheme had not existed (assuming older cars are scrapped 5 years earlier than would normally be the case).
[These calculations include an assessment of vehicle use, upstream fuel emissions AND vehicle manufacture. The modelling assumes: average tailpipe CO2 emissions in 1999 of 185 g/km; average tailpipe CO2 emissions in 2009 of 154 g/km; upstream fuel CO2 emissions 26-36 g/km depending on fuel type and car age; car manufacture CO2 emissions 21-31 g/km depending on fuel type and car age; 10 year age deterioration factor 10% for greenhouse gases; real world driving factor 15%; diesel penetration 1999 of 17%; diesel penetration 2009 of 44%; average car mileage 15,000 km].
Given that these figures suggest that the announced scheme will have a modest, but measurable, environmental benefit, added to the crucial support for jobs in the auto industry (the scheme's main aim), WhatGreenCar broadly supports the car scrappage scheme although it maintains that an opportunity to further reduce emissions by setting limits on the CO2 emissions of new cars purchased through the scheme has been missed.
Scrappage schemes are currently operating in Austria, France, Germany, Greece, Italy, Portugal, Romania and Spain, typically on cars over 10 years old. Germany has seen a soar in car sales of 21 per cent in February and 40 per cent in Germany in March.
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