Scrapping cars for large sums of cash may seem daft, and on the face of it, where is the benefit to everyone going to come from and how does it work? It's fairly simple, if you have a car of ten years old or older and want to purchase a new vehicle, the Government will provide £1000 against the cost of your new car and the car industry will match that giving you £2000 off, providing your old banger is scrapped. The Government is so convinced that this will help kick start the car industry, which we must admit is struggling, that it has put £300 million aside to pay for it.
"First come first served," or "get in quick," are now the slogans being banded about by the Government as the scheme has taken off and if you don't apply soon you could miss out. Once the £300 million is gone ...well...it's gone. One in five cars sold recently has been via the scrappage scheme and since its introduction in April 35,000 cars have been ordered or sold.
Car sales and commercial vehicle sales need a boost as British vehicle production has dropped by 55.3 per cent and 65.2 per cent respectively. A demand needs to be created to keep car and van sales bumping along, as it isn't just the main vehicle manufacturer that is suffering but all of the smaller factories that form part of its supply chain. Everyone from the company that makes the seat cushions through to the wing mirror suppliers will all be hit if the car manufacturer goes to the wall.
A car industry insider said: "Do I think the scheme is a good idea? Yes in short. It's not been running too long here, but if you look at what happened to sales in France and Germany then the same should happen here. I don't think it'll have a negative long term effect either.
"Not wanting to sound like a snob, but most people who run a ten year old car wouldn't buy a new one without big incentives.
Saving the car market is vital to UK industry, just look at the state of America's car industry and the impact that is having here. If you don't feel it is relevant then speak to any of the 5,500 workers at Vauxhall who were on the brink of losing their jobs thanks to the American market melt down which was hurting General Motors, the parent company to Vauxhall . They had to be saved by a Canadian company, Magna, who may still cut some positions. Whatever way you look at it we need to keep the car market afloat.
With all of these types of schemes there will be people who will knock it. The Government is spending money on a worthy cause, which is unusual, but there is always some do-gooder who doesn't agree and will actually stand up and say so. This time round it is the environmentalists. Their beef is that the car scheme should encourage the sales of greener vehicles like hybrids or full blown electric cars. I guess we can all see where they are coming from but they are missing the point. The British car industry needs sales at all levels, trying to push people into hybrids, which currently only make up a small part of the market, isn't going to give it the boost it needs.
On the flip side new cars these days are a lot greener than ten year old cars are so in a way the Greenies are getting what they want. New cars are more fuel efficient and they are also a lot safer with active safety features, so really everyone should be happy with the proposal.
One area where it isn't helping sales is the premier car market. I guess if you are shopping in that bracket then the Government incentive isn't going to interest you as money isn't an issue.
The car manufacturers themselves are jumping on the band wagon and tweaking the scheme to suit, and make their product more attractive. Take Nissan for example, they are offering the same deal but on eight year old cars with a trade in discount of £2000 providing you are buying one of their British built cars.