£2,000 car scrappage scheme – bad news for the British car industry

2986837143_1d03517a9e_mThe British Government has today announced a £2,000 car scrapping scheme for people that choose to buy a new car and scrap their old vehicle.

How it works

From next month until March 2010 motorists to get £2,000 discount on new cars if they trade in cars older than 10 years

• The government will provide £1,000 with the industry expected to provide the other half

Whilst on the face of it, this is great news for anyone with an old car looking for a new one – there are huge long term negative effects for the car market and the consumer.

The Irish Government announced something similar a few years back offering people €1000 to scrap their old car against a new one.  The following problems now seen in the Irish market will I am sure be reflected here within the next 5 years.

1.  With fewer (over 10) year old cars on the road now than ever before – the value of these cars have rocketed making it extremely expensive to purchase a ‘cheap runabout’ people will also purchase cheap cars in order to trade them in and scarp them.

2.  Car retailers are less likely to cut you a deal on a new vehicle as they first have to absorb the first £1000 themselves and then wait to claim the second £1000 from the government

3.  Cars that are 2/3 years old fall into this funny area where they are not worth enough money to scrap them, but are to expensive to purchase as you are not receiving the rebate against them, thereby de valuing the product.

4. As all the old cars get crushed, not recycled it becomes extremely difficult to obtain parts for older cars.

5. It is still increasingly difficult to obtain finance on a new car, no matter how much the discount is – if the banks wont lend then there is no money to spend !

In short, I think that this scheme is not only bad for the car business, but it is also bad for the consumer and the wider ‘old car enthusiasts’ like myself.

This is simply another measure from the British Government to use smoke and mirrors to try and get us to spend our way out the recession they created.

Ten Cars that should be saved from the scrapper !

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11 Comments on “£2,000 car scrappage scheme – bad news for the British car industry”

  1. Interesting idea on the “old car enthusiast”. Unless you have some weird fetish, the sort of cars that people are enthusiastic about aren’t going to get scrapped anyway. No-one is trading in their Ferrari 308 or Series 1 Landy in this scheme, they have these cars because they love them.

    I think there is an interesting problem. The people (like myself) who are driving cars over ten years old probably can’t afford a brand new car anyway, even with a couple of grand off. They’re more likely to have the funds to buy something in the 3-6 year old bracket which would still be safer/cleaner and all those things the government is suggesting as a good reason to upgrade, but they won’t be getting any help with that.

    It will be interesting to see what comes of this.

  2. Rob Lazzurs says:

    While I agree that the destruction rather than recycling is a very bad thing I don’t think older cars being priced out of the market is a bad thing. This could be a really good thing for the car industry here with cars like this being developed and sold here.

    http://www.reghardware.co.uk/2009/04/21/bee_shows_bee_one/

    Overall however I don’t think the scheme goes on for long enough to make any major impact and I agree that it is mostly smoke and mirrors and not much else.

  3. Your right on both accounts, however I have a Jeep XJ – its not worth a great pile of money so when i bought my VRS i chose to keep the Jeep, however if i could have gotten £2,000 for it i might have reconsidered.

    But like yourself the cost of a new car against a two year old one is unreal. I have just bought a two year old vRS for around the 10k mark – new this would have cost me £24,000.

  4. last comment from me was in reply to Stuart

  5. this idea is not good for the car lover but is good for my longer term job security!!

  6. So I was speaking to a big car dealer this morning (he sells alot of cars, he is not 20stone !) He said that the £2000 is off the RRP and that he is already selling brand new cars for less than £2000 off RRP – so they will be advising customers not to take the rebate and just to a standard trade in.

    He agreed it was bad for the industry but thinks it will help get people to start thinking about changing their cars although his new car to used car ration at present is 20/80

  7. MTemepmousa says:

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  8. Hi, good post. I have been thinking about this issue,so thanks for writing. I will definitely be coming back to your posts.

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  10. KrisBelucci says:

    Hi, good post. I have been wondering about this issue,so thanks for posting. I’ll definitely be coming back to your site.

  11. […] I spoke about it at the time and said that “I think that this scheme is not only bad for the car business, but it is also bad for the con… […]


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