Car Scrappage Scheme Proves To Be Big Success
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.
600 million pounds was the total price to run the scheme. Out of the total pot required to fund the scheme, half was payed by the tax payer, the other half was payed for by the car manufacturers. Despite this being a large sum to invest in a scheme, it’s certainly proving successful for the market??
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. Overall 157,149 new cars were registered last month, overall a 2.4% rise in sales from last 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.
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. With around 144,000 new cars registered with the scheme since it started, I wouldn’t be surprised if they continued it into 2010.
Car manufacturers will hope that if the scheme is continued, the rise in car sales will continue as more people invest in the scheme.
Despite it being a big success for the new car sector, it has caused some troubles in other parts of the market. The first one is the the second hand market. Due to the large number of cars being scrapped, the amount of second hand cars on the market are being reduced. The second sector that’s 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. Luckily, this problem doesn’t so much effect the van contract hire sector because the scheme doesn’t benefit van scrappage as yet.