Car scrappage scheme
The Government announced the introduction of a temporary vehicle scrappage scheme to give a boost to the car industry during the current downturn.
A discount of £2,000 will be offered to consumers buying a new vehicle to replace a vehicle more than ten years old which they have owned for more than twelve months. The Government will set aside £300 million for this scheme with funding matched by manufacturers participating in the scheme.
The Government will work with industry to introduce the scheme next month. The scheme will end by the start of March 2010, or when funding for the scheme has been used if earlier.
We are supportive of initiatives designed to benefit the environment and await details of how the scheme will work in practice. A further boost would be provided if employers could also benefit from discounts on purchasing new vehicles to be provided as company cars to employees surrendering their old vehicles. If left to individuals alone, it remains to be seen whether or not the discount offered will be sufficient to change behaviours at a time when many are spending less and have reduced access to credit. If this is effective, the initiative should provide a welcome boost for the market in new cars in the UK. We understand it has had some success in Germany.
