Scrappage - Success or Failure?

The Scrappage scheme was introduced in Britain in May 2009 to try to help out a struggling car industry that was on the brink of large scale job losses due to the worldwide recession. It had already been tried in other countries including Germany in particular where it had been a huge success.

The UK version was more watered down than the German one but still offered very good savings for new car buyers in the UK with the government contributing £1000 and the manufacturer another £1000 when a customer traded in an old car to buy a new one.

In actual fact the increased VAT returns from new car sales probably more than covered the governments contribution anyway, so it was cleverly handled in a time when government spending had to be very constrained.

The Scrappage Scheme also had a 'green' angle to it as well because customers were mostly looking to buy the cheapest new car possible and these tended to be the small, economical cars with low Co2 ratings.

Most manufacturers took part in the scheme and the biggest winner was Hyundai who saw their sales double over the period. Kia also saw a big increase and in fact most manufacturers benefited.

After the scheme ended in March 2010 sales naturally declined and some manufacturers tried to prolong their successes by introducing their own 'Swappage' scheme under various criteria.

So was the Scrappage Scheme a success?
Undoubtedly. Very little cost to the government, 400,000 new car sales which is reckoned to have saved 4000+ jobs, and also quite a decent switch of old high Co2 cars to very efficent modern low Co2 ones. The old cars were of course scrapped completely and therefore it should result in lower Co2 figures overall although of course extra Co2 is used in the production of new cars.

Will it be tried again?
If anything the current state of the economy is even worse than it was in 2009 and although car sales have been ok in 2011 it's highly likely that 2012 will put the UK motoring industry under enormous pressure again, so they may well try to argue the case for another Scrappage adventure!