SCRAP: Fleet used boost
April 7th, 2009 by Richard Aucock
SCRAPPAGE incentives for new cars must be extended to the used car market too, says the country’s car fleet representative.
The Association of Chief Fleet Operators says that used cars up to four years old, with CO2 emissions of 165g/km or less, should also be covered by the scrap scheme.
This could be a sliding scale of incentives, related to vehicle age:
• £2000 – New car
• £1500 – 12 month old
• £1200 – 2 years old
• £900 – 3 years old
• £500 – 4 years old
Why?
Because this would boost much more of the UK car market – and give a ‘ripple effect’ of residual value improvements.
Improving used values would help the balance sheers of outright-purchase fleets, contract hire and leasing compares – all firms who hold huge stocks of cars on their books.
Thus, instead of having to extend existing contracts, they could afford to sell the cars they currently own, and stimulate the new car market by starting buying again.
ACFO chairman Julie Jenner noted that current talks have centred around new cars only. ‘The vast majority of these motorists drive older cars because they cannot afford to buy and run new or nearly-new models.
‘Even with the benefit of a scrappage incentive they are unlikely to either have the cash or be able to obtain the credit to fund the outstanding amount on a new or nearly-new vehicle.
‘By including a greater proportion of the UK car parc within any newly introduced scrappage scheme, there is a greater likelihood that more people will trade-in their old polluting vehicle for a newer model that, in many cases will be an ex-company-owned vehicle.’
The benefits of this are simple, she said. ‘Such a move will kick-start new and used vehicle demand and fleets will, in many cases, be persuaded to return to the new car market as a result.
‘Our proposal has the benefit of stimulating vehicle demand across the entire vehicle-buying sector.’
Jenner said the qualifying prices would be slashed. A four year old Ford Focus 1.4 Studio has a CAP price of £2875. A Vauxhall Vectra 1.9 CDTi LS, £3000. Both are low-emissions cars and meet Euro 4 exhaust standards.
Other sensible advice from ACFO included a promise that the scheme be run for a minimum of 18 months. Otherwise, there’s the risk of ‘an instant demand peak with no long-term benefits.’
SCRAP SCHEME NOW: A call to arms
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April 8th, 2009 at 6:59 am
The scrap scheme is very short term and won’t save many UK jobs, with regards to the green angle as most cars are imported and transported to the UK any increase in new sales will have a minimal impact.
What about a scheme that part funded a replacement cat convertor on all cars over 3 years old as research shows that the majority of used cars emmissions would be reduced to below the original manufacturers outputs if a new approved cat convertor was fitted – this might have a greater impact on emmissions. We could make this part of the MOT test to ensure tight controls.
Another key point that is not being taken into consideration is the funding gap – if a consumer has a 10 year old vehicle with a Scrap Value of £2k and a new vehicle in the region of £8-£15k who will fund the difference, especially if they are not a prime borrower which the majority of car owners with 10+ year old cars are not. We are told that the Credit Crunch started with sub-prime lending getting out of control – should we not learn from this lesson?
April 8th, 2009 at 9:18 am
This scrappage scheme will be the death of the independant used dealers who have shown good management skills through difficult times without help from anyone least of the government.Why should my customer be enticed away from me by the government to line the pockets of the foolish and inept dealer network system.don’t look outside the box look inside and stop the rot from within.Bad practice generates bad business and to a man the manufacturers have had bad practices for many years and are now weeping because it has come round and bitten them hard as an industry and even harder in their personel pockets.
Clean up your act and gain credibility by being good and not just greedy
April 8th, 2009 at 9:57 am
Latest word is that the Government may extend the scrappage scheme to nearly new cars, too… any thoughts on this?
Richard.