Be Paid To Scrap Your Car
The UK April budget may see something unusual within to stimulate the new car industry or nearly new market under 1 year old. It follows what other nations such as Germany have done and that is to reward car owners with a nice bonus if they scrap their car over 9 years old and buy a new fuel efficient car under 1 year old.
In Germany motorists have been rewarded up to 2500 Euros when they have done this, there are current rumours that the chancellor may offer up to £2000 per old car scraped.
It would be interesting to see how the government would apply this incentive as in Germany new car sales rose by 40% because of the scheme, old sectors of the market i.e. used car sales dropped. Currently the UK is seeing a rise in used cars sales with the underlying prices rising by 5%, surly this new scheme would effect this market.
It may also affect other car markets indirectly such as the salvage section. It is very possible that a car about to go to the salvage yard that is currently worth £50 may suddenly have a £2000 value from the chancellor. Breaker yards could also be affected as the supply of car parts over 10 years old will likely diminish, but there is also likely to be a huge influx of cars to be scrapped; high supply with a low demand.
The next car industry that may be affected is the Car Lease sector. It is estimated that 50% of all new car sales are to be leased. With huge discounts being applied to purchasing a new car, it may be that many choose not to opt for a car lease policy and buy themselves direct.
On the face of it a 40% increase in new car sales certainly is something to aim for. But it is important for any chancellor to see the whole picture and is the tax payer contributing to save one industry but putting other businesses at risk. Lets see when the budget is released later in April.