Scrappage good or bad?
October 27th, 2009 by Richard Aucock
SCRAPPAGE has been called into doubt by one industry title, which asks if consumers really have benefitted.
Used Car Expert acknowledges the scheme has been good for car makers and dealers.
Indeed, car markets where scrappage has been in place have seen double-figure new car sales increases. This is a big contrast to those where it hasn’t been running… Ireland, for example, saw September sales plummet 35 percent.
However, has the consumer lost out in all this? The title goes on to point out much more than the £2000 scrappage discount can be saved by shopping around at car dealers…
‘Scrappage is not a rip-off if you want a car that is hardly available on the nearly new market, or from a brand that is hard to secure discounts from,’ admitted editor Matt Tumbridge.
However, for the smaller cars which have proven particularly popular under the scheme, Tumbridge has reservations with scrappage. This is due, he says, to the existence of nearly-new cars.
‘A Renault Clio 1.2 Dynamique 5dr has a list price of £12,270 – with £2000 off via the scrappage deal, you pay £10,270.
‘But Used Car Expert recommends you can get exactly the same model from Evans Halshaw for £9990, with just over a thousand miles on the clock.
‘Plus, you will be able to get some money for your part-exchange. An average trade-in price of £500-£1000 on a 10 or 11 year old car means you are saving £3000 in total, without trying.’
He also said it was possible to get a nearly new Peugeot 207 with, he calculated, a total cost to change price of £9000. Compare this to the car’s list price of £12,695.
‘These are substantial savings which show that, if you are looking to replace an old car, the scrappage scheme might not be the most cost effective way for consumers to do it.
‘Many people have definitely saved less than they could by not looking at the nearly new market.’
What are your views on the stance argued by Tumbridge? Do you agree with what he says, or do you think the shortage of nearly-new car stock means customers will struggle to do as he suggests?
Any thoughts, as ever, appreciated!
Tags: new car scrap, scrappage, used car buyer
October 27th, 2009 at 8:35 pm
Parker’s has been outlining the disadvantages of scrappage to consumers since it was announced. It prevents people choosing some of the great value cars up to a year old that might only have delivery mileage on the clock. It forces manufacturers to subsidise it, even though the Government starts pocketing more cash than it puts in on cars less than £8000 OTR. Scrappage schemes in other countries – particularly the far more generous German scheme – has had a bigger impact on car production in the UK. It has possibly brought forward purchases from 2010, making life more difficult for the industry after the scheme ends. It works for some people, but not the vast majority of consumers, and has created an artificial short-term stimulus that may not be sustained after the scheme ends.