Car Scrappage in the UK
A car scrappage scheme is when the government provides a grant to people who turn in their old cars and purchase a new one. It has been used extensively in Europe (Germany in particular) in order to help boost sales of new cars and thus support the car industry which is suffering lately. Car Scrappage schemes are also marketed as being environmentally friendly schemes, the idea being that the old car being scrapped is probably less fuel efficient and emits more trace toxic emissions than a brand new modern car.
Car Scrappage Financial Benefits
Typically a car scrappage scheme will offer the consumer around £2,000 to scrap their old car and replace it with a new one, this is often far more than the value of the old car and so could save the consumer a large sum of money. The new cars are generally more fuel efficient also, on average a car made pre 2000 is around 15% less fuel efficient than a modern vehicle, thus a car scrappage scheme will help them save money in the long run on their fuel bills.
With parts of Europe already in on a car scrappage scheme it may only be a matter of time before the UK government joins the gang in order to show economic solidarity with our EU partners.
Financial disadvantages to Car Scrappage
The problem with a car scrappage scheme in the UK is that most cars sold here are actually bought in from abroad. Thus the government will be in effect subsidising car industries in other nations. The car scrappage scheme is very popular in Germany as that is where most of the major manufacturers are based.
However the UK does make a significant number of car spare parts and has a number of assembly plants dotted around the country. The people working at these plants will benefit greatly from additional job security if a car scrappage scheme is introduced.
Other industries are also reporting that they are doing very well out of the low turnover of new cars, Halford for example is enjoying a large rise in car maintenance items as well as seeing a massive surge in bicycle sales. Any encouragement to buy new cars via a car scrappage scheme will probably severly effect sales for these sorts of companies
Car Scrappage for the Environment
As mentioned previously the older cars tend to have a lower fuel efficiency than modern vehicles, and the amount of "toxic" emissions from the modern car is far far lower than older models. Therefore encouraging people to swap out there cars for newer vehicles will gradually reduce the overall fuel consumption per mile of the British population.
The old cars will of course have to be scrapped (hence the name "car scrappage!) however a large portion of these vehicles can be recycled as scrap metal.
Environmental disadvantages of car scrappage
Unfortunately as with most environmental issues things aren"t as clear cut as only considering the fuel efficiency improvements. For a starter the carbon footprint of building a brand new car has to be taken into consideration, all those raw materials, transport issues, new modern materials etc take their toll in the form of carbon emissions, even before the new car has driven a single mile. Reports suggest that the amount of carbon produced duing car manufacture is equivalent to driving a modern car 50,000. Thus any new car sold as part of a scrappage scheme is going to provide an initial whack of carbon emissions into the environment.
Also consumers may be tempted to use the additional money from the car scrappage scheme to "trade up" their car, i.e. use the money to buy a bigger, faster, more powerful vehicle that consumes more fuel. Hardly a good idea for the environment....
Car Scrappage Scheme in the UK
The budget on the 22nd April may well provide a clue as to whether the UK will see a car scrappage scheme. Perhaps the government will attach it some novel strings to the idea. We at whatgas would like to see a car scrappage scheme for the more fuel efficient cars only, and ones built in the UK. The first idea could well be plausible, but the second would clearly be in defiance of Gordon Browns stated goals of anti-protectionism, we also suspect that it would be illegal under EU law