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UK Scrappage Scheme launches Monday: Will it work?

The scheme to scrap old cars against the purchase of new, more environmentally friendly models launches officially tomorrow in an attempt to kick start the flagging motoring industry as well as promote the use of vehicles with higher fuel economy. Reactions have been mixed to say the least and this is how the various parties involved will be affected.

  • Motorists

    Many have studied the scheme and decided it won’t benefit them in any way. The Parker’s Guide undertook a survey of over 600 visitors to its website, of whom 81% said they wouldn’t be taking advantage of the scheme with 70% saying that it wasn’t generous enough. This is understandable, given that to be a new car many would require credit – which isn’t that hard to come by in the current economic climate. The scheme also promotes the sale of new vehicles with CO2 emissions of under 120g/Km, which has limited the choice of vehicles to buy. This limits the scheme to some of the smallest vehicles on the market, including the Nissan Micra, Ford Focus and Kia Picanto.

  • Manufacturers

    The car industry itself is pinning its hopes on the UK scrappage scheme reviving its sales figures as it has done in Germany. However, the £1,000 each manufacturer must contribute towards the scheme means that some smaller vehicles, i.e. those best suited for the scheme, will be sold at a loss effectively damaging the industry that the scheme hopes to revive. The UK’s largest car dealership Pendragon warns that the scrappage scheme is too little too late, and will do little to breathe life back into the industry.

  • Environmentalists

    The vehicles targeted by the scrappage scheme have to be at least ten years old but environmental experts claim that cars of that age have already done the majority of their polluting making the scheme ineffective in that regard. The Environmental Transport Association (ETA) also states that the scheme isn’t “green” as it doesn’t take into account the environmental impact of manufacturing the new vehicle or scrapping the old one.

  • Second-hand car market

    Stockbroker Brewin Dolphin released research showing 33% f the value of a new car is often lost in the first year, rising to 40% in year two and between 50% and 65% in year three. This means that buying a nearly new vehicle of only one, two or three years old will save substantially more than the scrappage discount. A secondary knock-on effect of scrapping a large quantity of second hand vehicles will be the supply chain for future generations of second hand cars.

  • The tax payer

    The UK government is putting £300m into the scrappage scheme but the vast majority of people eligible can’t or won’t take advantage of the scheme. 80% of new cars in Britain are imported therefore much of that investment will be going abroad. Nissan is offering heavier discounts on UK made vehicles to retain jobs in its Sunderland plant but this is rarity for the government incentive to directly benefit UK jobs.

Overall the scrappage scheme in the UK seems to look like it has limited scope, doesn’t benefit the majority of its intended audience and doesn’t deliver its promises on addressing environmental issues or to the car industry. It will have to be seen how widely it will be adopted and fingers are crossed that there will be a similar response to the German scheme and that it will have a long term benefit on the economy as a whole.

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Related posts:

  1. UK Scrappage Scheme Now Official
  2. Scrappage scheme kicks off with 35,000 sales
  3. UK Car Scrappage scheme being considered

5 Responses to “UK Scrappage Scheme launches Monday: Will it work?”

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  3. How soon will you update your blog? I’m interested in reading some more information on this issue.

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