Scrapping scheme: success or failure?

Today is the last day of the Scrappage Scheme, the government’s experimental plan to rescue the struggling auto industry during the global recession. So 10 months and £ 400 million later … was it worth it?

There’s no question that scrapping has boosted car sales – 396,000 to be precise – roughly a fifth of all new car registrations since the plan began in May 2009. In the months leading up to scrapping, the industry was In a terrible state, in December 2008 the auto industry suffered its worst year-on-year decline since 1980, with thousands of people potentially losing their jobs. Today, those people are still employed, paying taxes, and the auto industry has seen growth for 8 consecutive months. In February 2010, British car sales increased 26.4% compared to February 2009, and car production increased 62.7%, the fourth consecutive monthly increase.

Thus, the majority of the industry has benefited (although the luxury segment of the market has not had much success with the scheme), along with motorists getting a good deal for a new car, and the planet has also benefited. of the scheme. Replacing the gas-guzzling ‘old gadgets’ that were traded in are ‘clean’ new cars, with the latest in engines and safety technology in tow (junkyards had an average CO2 emissions of 137.2g / km), it will improve our pollution and victims. Statistics.

Although the government has had to shell out £ 400 million for the scheme, even they have seen a return on this, with VAT collected from all new car sales.

In terms of manufacturers, Hyundai has emerged as the winner in the scrapping battle. Hyundai’s sales increased 102% from February 2009 to February 2010, and scrap metal sales accounted for about 70% of its total sales. Other winners include Ford, Kia, Fiat, Toyota, and Skoda.

So, did someone not benefit from the scrapping? Well, as mentioned above, luxury car dealers didn’t see much acceptance from junkyard customers (a £ 2000 savings on a £ 50k engine is nothing to write home about, after all), and the Used car dealerships weren’t exactly jumping for joy when scrapping was announced, but overall scrapping has been a win-win situation.

The problem with scrapping is: what happens now that it is over? The UK government had already expanded the plan to make the most of the £ 400 million, but after today that’s it, no more. Some manufacturers are extending the savings for customers with their own scrap versions.

Many industry experts now believe that demand will shift from discounted new cars to good-quality used cars, and recent increases in commercial values ​​have reflected this. The industry may weaken slightly throughout 2010, but it is certainly in a better position than 12 months ago, and what will happen now remains to be seen.