posted 6 years ago

Is it time for a new ‘scrappage scheme’?

Sometimes the government gets it right and one of those times was the introduction of the ‘scrappage scheme’

Sometimes the government gets it right and one of those times was the introduction of the ‘scrappage scheme’. In May 2009 customers were flocking to new car showrooms to take advantage of the £2000 incentive and more than 17,000 cars were axed in the first week most of which should have been on the scrapheap years ago.

The UK was not the only country to introduce a scrappage scheme. Germany did likewise and the initiative was hailed as dragging the country out of the recession, sales plummeted as soon as the policy ended. Barack Obama's "cash for clunkers" is also said to have rescued the American car industry, it was one of his main selling points in the recent presidential election.

Figures reveal that new car sales this year is likely to be below two million. The Government has now turned its attention to the electric car industry and this is proving to be a slow starter. This time last year less than one thousand pure electric cars were sold. A survey revealed the vast gap between electric car capabilities today and what consumers want before considering buying an electric car showed that potential buyers expect electric cars to go further, on shorter charge times, for a cheaper buying price than today. Electric car manufacturers will be disappointed at the survey which was the largest survey of its kind gathering opinions from 13,000 people in 17 countries. In the UK only 11% said they would consider buying an electric car today.

The scrappage scheme ran from May 2009 to March 2010, everyone seemed to be a winner. The motorist got rid of the old rustbucket that polluted the roads, car workers were kept in work because demand soared. Even where the cars bought were made abroad, showroom staff kept their jobs rather than going on to the dole. Figures spoke for themselves on average, the cars which went to the breaker's yard were emitting 182.1g of CO2 per kilometre, the new replacements emitting only 132.4g/km. Nearly 84,400 new cars were registered under the scheme using more than one quarter of its £600 million joint government-industry funding.

The Treasury made a profit from the whole deal, as money came rolling in whenever a scrappage customer paid more than £7600 for a car including tax. With VAT now being charged at 20 per cent, the arguments for reintroducing scrappage are even more attractive.