Scrappage – Cash for Your Old Car

There’s a new buzz word in the motor industry – Scrappage. Under this proposed scheme, consumers who have a car over nine years old, would be able to take it to a recycling plant and in return they would receive a voucher for two thousand pounds off a new, or up to one year old car bought from a dealership. Great for the car industry, great for suppliers, great for dealerships, great for recycling, great for the environment, great for everyone. Or is it?

Such schemes are already in operation in a number of countries and in most cases they have noticeably increased sales in new cars, boosting their economies, helping to keep car workers employed and taking high polluting vehicles off the road. On the face of it, it looks like a no brainer for us in the UK too.

Lord Mandelson – the man that’s made more comebacks than Rocky – is apparently in advanced talks to approve a deal that would see £500 million earmarked for such a scheme in the UK. If only he knew we only really make other peoples cars. The majority of our car industry went to the wall years ago. Sad as the figures are, the fact is that 78 percent of the cars produced in Britain are exported and 86 percent of cars bought in Britain have been imported.

As Scrappage schemes in other countries have shown, almost all drivers taking part would spend their £2,000 grant on small, highly fuel-efficient cars, cars that just aren’t produced in the UK. In fact the only cars that fall into this category are the MINI and the Nissan Micra, which in total make up four percent of the UK market. Meaning 96 percent would go towards subsidising factories on foreign soil. In Germany sixty five percent of the vehicles bought in their Scrappage scheme are produced in German Factories. This is closely replicated in France, with sixty two percent of vehicles being produced in French factories.

The Scrappage scheme would undoubtedly help the dealers in the UK. However, recently the discounts being offered by dealers has often exceeded £2000 and that obviously has not kick started the car market. If introduced would the dealers not just revert to the list price and knock off the two grand? If discounts of £7,500 off a Land Rover can’t get someone to trade in their banger, it’s doubtful if an extra £2000 will make much of a difference.

Finally, we move to the “green” argument, taking inefficient, polluting vehicles off the road and replacing them with shiny, new, highly fuel efficient vehicles, sounds great until you look at the fact that even for the most fuel efficient cars the carbon cost for manufacturing would outweigh the benefits gained. Indeed taking a car off the road after nine years would appear to be an act of recklessness when it comes to the environment. Philip Gomm of the RAC Foundation has been quoted as saying “Research shows that the optimal trade-in age, from an environmental perspective, is about 18 years. We would not want to see any old vehicle being scrapped, irrespective of age, without fully assessing the carbon emission implications of building a new one”. Scrappage may be the way to get some of the worst polluting vehicles off the road but it is by no means a “one size fits all” solution. It would be ridiculous if you could scrap your nine year old Citroen Saxo to get £2000 off a five litre Volkswagen Touareg.

Yes the automotive industry is in favour and if the polls are to be believed so is the UK public, but if you ask someone whether they would like £2000 off a new car their answer will no doubt be yes - even if they can’t afford one.

Is Scrappage the solution? First we need to work out the exact problem. Is it car sales? Is it the environment? Is it polluting vehicles? Or is it Lord Mandelson introducing a populist policy to support an ailing government? Time will tell.