Will there be a scrappage scheme?

Jul 27, 2020

Will there be a scrappage scheme?

A survey of in-market new car buyers suggests that around 30% of motorists are waiting to see if any purchase incentives will be introduced by the government before they consider making the purchase amid rumours of a scrappage scheme.

While it was suggested that a scrappage scheme aimed at electric vehicles was being considered, potentially offering up to £6,000 off when a new zero-emission vehicle is swapped for a petrol or diesel model, this has also been reported to be unlikely – though encouraging motorists to switch to electric vehicles has been welcomed by motoring and environmental groups.

In 2009, a scrappage scheme introduced to kick-start the sector following the financial crash, saw 400,000 cleaner new models replacing older cars. However, given that the government aims to ban the sale of petrol, diesel and hybrid new cars from 2035, including these cars in a scrappage scheme now may seem contradictory to that particular goal. Interestingly, more than one in 12 UK buyers are now looking for a pure EV, with a further one in 7 thinking of switching to a hybrid model after the crisis, according to What Car? magazine.

Reports have suggested that there is some pent-up demand for new cars as a result of closed dealerships during the coronavirus lockdown, but the industry is calling for added incentives to boost both the sector and the economy.

There is some debate however, over whether scrappage schemes have the desired stimulating effect. The International Council on Clean Transportation (ICCT) said that previous scrappage schemes have failed to help economies recover from financial crises. Their analysis suggests that vehicle scrappage schemes have few economic benefits as they subsidise sales that would have taken place anyway, diminish sales that would have been made in subsequent years, and do not reduce CO2 emissions unless they are targeted at low emissions vehicles.

Analysts at GlobalData, also suggest that a scrappage scheme for the purchase of electric cars may not be introduced as it would be of more benefit to overseas vehicle manufacturers than to domestic UK manufacturers – the UK’s best-selling cars are predominantly built in other countries.

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