Scrappage incentive scheme reactions

Posted on 2 Jul 2009 by The Manufacturer

Some of our readers reactions to the governments scrappage scheme.

Suren Patel, Reader

“Government’s scheme is well intentioned, however it is also flawed and not clearly thought through.

• It must be noted that whilst all manufacturers are generally blaming the economic factors for their inability to sell cars, equally well they are to blame not doing enough to make any concessions in lowering their cost basis to enable them to sell more cars. Indeed if base costs is taken into consideration, then from my personal experience of buying a new car, they are effectively increasing the costs on quarterly basis. ( I recently bough a new car and in the twelve weeks before delivery, I had seen three different price catalogues published by the manufacturer, all showing an increase in price.

• Blind side of the government’s thinking. When a dealer sells someone a new car, say an old banger worth in real terms to about £400. To the buyer he will give the full scrappage allowance of £2000. That would include £1000 from the government and according to him, £1000 from him. In reality, the real cost to him is only £600 as he would otherwise not have given £1000 for something that was worth only £400. If dealer was really giving any of his full amount, the buyer would have received a trade in scrappage value of £2400. This is not happening.
So in real terms the dealers are using government’s money to their benefit, with their profits retained or increased for the sale. This makes mockery of government’s good intentions.

Secondly, I am too sure if these scrappage vehicles are really written off or if there is a policing mechanism in place to stop these vehicles appearing on the streets again. We have all known of ‘CUT and SHUT’ vehicles originating from insurance write offs, appearing on the roads.

• Present scheme does not stop a dealer from increasing the RRP value of the vehicle to offset the £1000 he is likely to give to the consumer. If this is a factor, again the Car dealers and the manufacturers are taking the government for a RIDE.

For a more effective scheme:

• Government should get the dealer to bind on the RRP values for fixed duration and any increases must be justified and agreed with the government.

• Dealers/Manufacturers must be made to justify their contributions in line with certified trade in values of scrappage vehicles.

Whilst there are no effective measures from the government, manufacturers will keep exploiting the government money and keep blaming that Not enough is done to activate the market.

I hope someone sees some light, before the manufacturers who are more likely to be bankrupt will render the government and the country at large bankrupt.”

Bruce H. Anderson, McLane Company, Inc

“I am not sure if there is a scrappage scheme this side of the pond or not. I know one has been talked about. Whilst morally-superior hybrid drivers may look with derision upon my methods of personal transport, I propose the following items for consideration:

My vehicles are both paid for. Were I to replace my worst offender with a more thrifty means of transport, would the car payment plus the increased insurance offset the savings in fuel? I think not. And if there are concerns about the carbon footprint of my land barge, what about the energy cost of producing its replacement? Any offset there? Again, I think not.

So it appears that the attempt by the morally bankrupt to encourage the populace to make a morally “correct” choice really boils down to three fundamental arguments. First, give the government more of your money in taxes. Second, spend money on something that you may not need in order to support a struggling industry. And third, since everyone does not have sacks of currency laying about, buy your car on credit! I believe we may have been down this road before. I would not expect different results on this journey.”

Tim Coley, Reader

“The scrappage incentive scheme should have been limited to cars who’s major manufacturing is done in Britain. The figures show that Hyundai are the early beneficiaries. How has that helped the British Automotive manufacturers?”

Mike Turner, Reader

“The downside is that many vehicles which may not be currently identified as ‘classics’ are being lost and their potential as ‘spares’ is not being utilised. Even a vehicle which was a complete technical & commercial disaster and which is worth nothing like £2000 can still be important to preserve as an example of the general history of the motor car. Such vehicles now have a rarity value precisely because they were a commercial failure.”