MPs Look To Extend Life Of Car Scrappage Scheme
Earlier this year in May, the UK government launched a scheme for scrapping old cars that rewarded new car buyers. Oddly enough it was called the ‘Car Scrappage Scheme’ and it gave car buyers 2000 towards a new car when they scrapped a car that’s more than 10 years old.
600 million pounds was the total price to run the scheme. Out of the total pot required to fund the scheme, half was payed by the tax payer, the other half was payed for by the car manufacturers. Despite this being a large sum to invest in a scheme, it’s certainly proving successful for the market.
The total number of registered cars for July 2009 were released last week and it seems to have risen by 2.4% compared to the same month last year. Overall 157,149 new cars were registered last month, overall a 2.4% rise in sales from last July. Out of the overall cars registered, over 33,000 of them were bought alongside the scrappage scheme. The last sales rise seen was back in April 2008, so although 2.4% is not a huge number, it’s still a number to be happy about.
Because the scheme has resulted in good news for the motoring industry, many MPs are calling for the scheme to be renewed for 2010. Currently the scheme is due to end either when the tax payers money input runs out, or in February 2010. With around 144,000 new cars registered with the scheme since it started, I wouldn’t be surprised if they continued it into 2010.
Car retailers will be hoping that if the scheme is kept going, the amount of cars being registered will continue to rise.
Although this is good news for the new car industry, there are some downsides for other sectors. The first would be the second hand market. Due to the large number of cars being scrapped, the amount of second hand cars on the market are being reduced. The other problem occurs in the cheap car leasing market.
Due to the majority of people buying new cars, leasing companies are missing out as people are not going for a Nissan lease when they can just scrap their older car for savings off a new one. Luckily, this problem doesn’t so much effect the van contract hire sector which doesn’t yet benefit from the scrappage scheme.
