It’s becoming clear just how poor this “scrappage incentive” is

The much talked about scrappage scheme, due to start 18th May, is starting to look like the 300lb gorilla in the room. Like we in the trade have been saying the only winners will be the likes of Renault, Peugeot, Ford etc who are desperate to shift metal and will probably just use the government subsidy to ‘top up’ the massive discounts they will already incentivise buyers with. Whilst late plate nearly new used cars are still thousands of pounds cheaper than new the cost to change, despite the meagre £2,000 total commitment, will still often be far more attractive than buying a new car on the scrappage scheme. Smaller, cheaper cars will be the only plausible cars that get the scheme going and they are the “go to” car in a recession anyway, so are selling reasonably well in any case.

The only people who we see benefiting from this “incentive” are older drivers who buy a new car once in a blue moon and wouldn’t dream of asking for a discount and possibly large families who will simply scrap the worst car in the family (the teenage driver’s), use the incentive against a new one for mum and dad and hand their old car down. By any standard these scenarios contain a narrow band of beneficiaries and with the recent news that has a survey for Parker’s Guide revealing that 81% of those questioned “would not be taking advantage of the scheme” then it’s certainly doesn’t look like the scheme will be as beneficial as was originally hoped.

Even scrappage scheme head cheerleader and SMMT Chief Executive, Paul Everitt is toning down his original enthusiasm.“We’ve been dealt the cards that we have,” he said. “Our job now is to make the best of it”. Doesn’t sound quite as enthusiastic now does he? And why would he? As usual with this government it’s all about spin without substance. By stipulating that participating manufacturers have to contribute 50% of the incentive they have really muddied the waters and just given the same manufacturers a PR and marketing tool and little else. It’s obviously confusing for most people and it will be hard for potential customers to discern whether they are getting anything over and above what they could have achieved anyway.

Presumably the government could easily have put in place a proper incentive and paid for it in extra VAT revenues but muddled thinking and half-baked measures have got in the way of a real stimulus package.