Car Scrappage Scheme Renewal Being Considered By Mandelson
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. Half of the total pot was funded by the tax payers, as for the other half, it was funded by the car manufacturers. Even though this is alot of money, it seems to be paying off for the economy??
The total number of registered cars for July 2009 were released last week and it seems to have risen by 2.4% compared to the same month last year. Overall 157,149 new cars were registered last month, overall a 2.4% rise in sales from last July. Out of those 157,000 odd cars, around 33,000 of them were bought as part of the scrappage scheme. This rise of 2.4%, although not alot, is actually the first rise in sales seen in the motoring industry since April last year.
Due to the good result that’s occured from the scheme, many MPs are calling for Lord Mandelson to continue the scheme for 2010. Currently the scheme is due to end either when the tax payers money input runs out, or in February 2010. However, because the scheme has become so popular with over 144,000 cars registered since it’s start in May, I would imagine they will continue the scheme.
Car retailers will be hoping that if the scheme is kept going, the amount of cars being registered will continue to rise.
Although this is good news for the new car industry, there are some downsides for other sectors. The first would be the second hand market. As a large number of decent cars are being scrapped, it’s becoming much harder to buy a suitable second hand car. The other sector affected is 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 when they can scrap their old car and save money on a new one. This problem has little effect on the van contract hire sector as the scrappage scheme doesn’t yet include vans.
