This entry was posted on Monday, August 17th, 2009 at 1:31 am and is filed under buying cars. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.
August 17, 2009
Back in May, the Government launched a scheme that would reward car buyers when they scrappage their old bangers. 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.
The overall cost for the scheme was 600 million pounds. 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. Although this seems a large amount, it’s definitely paying off.
The overall amount of new registered cars for this July was announced the other day and they showed a rise of 2.4% compared to July last year. Overall 157,149 new cars were registered last month, overall a 2.4% rise in sales from last July. Out of the total 157,149 cars registered in July, over 33,000 of them were registered using the scrappage scheme system. Even though a 2.4% rise is not a huge number to be happy about, it’s still good news because this rise is the first seen in the motor industry since April 2008.
Because this is such good news for the industry, many government MPs are calling for Lord Mandelson to extend the scheme further into 2010. The scheme is currently set to end by February 2010 or when the tax payers 300 million runs out. However, due to the massive amount of popularity for the schme with almost 150,000 cars registered using it, I would assume they will carry the scheme on.
Car retailers will be hoping that if the scheme is kept going, the amount of cars being registered will continue to rise.
Despite this being good news, there are some downsides to the scrappage scheme. 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 second sector that’s affected is the cheap car leasing market.
Due to the high number of new cars being registered, the leasing sector is loosing out because people are opting for a new car rather than a Nissan lease when they could just scrap their old car and get more money than it’s worth off a new car. Fortunately, this problem isn’t also passed onto the van contract hire sector because the scheme doesn’t benefit van scrappage as yet.
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