Earlier this year in May, the UK government launched a scheme for scrapping old cars that rewarded new car buyers. 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 cost to run the scheme cost a total of 600 million pounds. Half of which was payed by tax payers and the other half was payed by the car manufacturers. Although this seems a large amount, it’s definitely paying off.
The total car sales for July 2009 have now been announced and they have found a 2.4% rise in sales compared to the same time last year. The 2.4% rise on last year’s figures mean that a total of 157,149 new cars were registered this July. Out of the total 157,149 cars registered in July, over 33,000 of them were registered using the scrappage scheme system. Although a 2.4% rise is not a huge number, it’s still good news because it’s the first rise in car sales since April 2008.
Because the scheme has resulted in good news for the motoring industry, many MPs are calling for the scheme to be renewed for 2010. Currently the cut off date for this scheme is February 2010, or whenever the 300 million pounds of tax payer money drys up. However, as it has proved so popular with over 144,000 cars registered with the scheme since it’s start back in May, I wouldn’t be shocked if it was continued.
Car manufacturers are hoping that if the scheme is continued, the rise seen in car sales will continue.
Although this is good news for the new car industry, there are some downsides for other sectors. The first one affected is the second hand car market. Because of the large amount of cars being scrapped, it’s becoming harder to find a second hand car. The second problem occurs with the cheap car leasing market.
Because many people are opting to buy a new car rather than lease, many leasing businesses are loosing out as people choose not to go for a Nissan lease whereas they could just scrap their old car and get money off a new one. Fortunately, this problem isn’t also passed onto the van contract hire sector because the scrappage scheme doesn’t count vans.
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