I think I understand the basic principles involved behind all such schemes:
1) To encourage new car sales with taxpayer-funded 'initiatives' thereby indirectly-subsidising the car manufacturers.
2) To remove older, less fuel-efficient cars from today's roads as part of the battle against global-warming.
Apart from the usual concerns involving moral hazard where our elected politicians are somehow almost always rewarded individually or on a groupage basis for all their help to business in one way or another, I was wondering just how exactly governments actually operate and manage car-scrapping schemes?
Because, it would appear to me that superficially at least, there might be ample scope for wide-spread fraudulent manipulation and activity...?!
If any 10 year old UK banger is ostensibly worth £2,000 now, if it were used against a new car purchase, does that mean that all >10 year old UK cars are today worth a minimum of £2,000, (less the discount that any new car buyer is willing to pay if they haven't their own >10 year old car available to scrap)...? By putting a base 'floor-price' on older cars, doesn't that somehow diminish any 'higher objectives' of removing older, less fuel-efficient cars from today's roads as part of the battle against global-warming...?
And when a car qualifying under the car-scrapping initiatives 'is scrapped', just what does that involve? Could the UK car ostensibly 'scrapped' be re-exported to say a French company as 'scrap', but somehow be recovered and then reused somehow as 'another car qualifying under that country's car-scrapping initiative', ad infinitum?
Whatever, those who are obliged to own 10 year old cars are not usually those that can afford to buy brand new cars, even with a £2,000 incentive. And presumably, all the others who could afford to replace their cars every couple of years, don't own 10 year old cars. So, what's the real point, unless governments involved are already aware that their initiatives will involve a lot of fraudulent activity but will nevertheless help new car manufacturers...?!
(corrected for some quite atrocious spelling mistakes which were sure to attract Rainboe's attention)
I can imagine 'better off' families (with several cars, including a ten-year old vehicle used for taking rubbish to the tip or something similar) cashing-in on this scheme. You have to have owned the old car for at least twelve months BTW. The rest of society that trundles around in 10 year old cars (because they can't afford better) are unlikely to be in a position to splash out on a brand new car that will lose £2000 as soon as it is driven out of the showroom.
OK, there might be a few, but not significant quantities IMO . . .
And, as has been pointed out, anyone wanting to buy a new car now could probably negotiate a discount of at least £2000 off the price.
What's to stop you or I purchasing any old banger for a hundred quid and then taking it to a dealership and getting £2000 for it when trading it in?
One of the conditions for the proposed scheme is the banger has to be registered to you for at least 12 months before you can claim your £2k. Also the government is only going to be providing half the money, the car manufacturers are expected to produce the other half.
Will this money be on top of any other discount you can negotiate on the list price (which is apparently considerable at the moment) I wonder?
I've just returned from a walk through the centre of our village. It is a fairly prosperous area. Parking is at a premium with all streets having one side continuously occupied. During the day all parking is time-restricted and pay-and-display (or resident permit). At 9pm all parking spaces were full.
I was surprised that 45% of all vehicles were at least ten years old - and none were what you might describe as 'bangers' - all seemed (at least visually) to be in good condition.
Admittedly, many are probably owned by people living in the smaller terraced houses (whereas other residents would have their own off-street parking) so the sample isn't necessarily representative of the total village vehicle population (though larger houses with youngsters would have older vehicles for the teenagers - it's not that affluent an area).
I doubt that the scrappage scheme will see these older vehicles disappear as they seem to be well-looked after and capable of some years more. I didn't count the number older than fifteen years but there seemed to be quite a few.
Oh, and these aren't 'prestige' plates - I only saw one that would have been (and that isn't a local vehicle). Maybe another time I'll do a detailed count of age of registration (most are regulars - especially at night).
So where are these 'scrappage' cars going to come from? I doubt that the 'social housing' estates will be rushing to buy new cars (even with £2000 off).
How many people here are likely to 'take the shilling'? My vehicle is Xreg - but I don't imagine myself spending £18-20,000+ to get an equivalent model . . .
I go and buy a bunch of scrappers for $100 each. I have a place to store them, long term (this excludes most of Europe and urban areas, but would work well in North America and OZ)...
I then place ads in the paper saying that if you invest $1,000 with me for a year I will get you $2,000. For a $1,000 you get the car and register it in your name. I store it for you for a year after which you take it to the dealer and get $2,000 rebate.
So my little battered old 9 yr old fiesta, worth about £500 on a good day, next year suddenly increases in value, and I could go and negotiate a deal on say a cheap new KIA (not that i'd want a KIA) for £5000, then trade my old car in and only pay £3000? Surely that isn't what they're saying? What's the catch? Is there a minimum new car price i'd have to pay or is it really as good a deal as it sounds?
(note that all calculations are based on list price, not the negotiable price that you could expect to pay if there wasn't any government scheme. Plus, you lose the value of your trade-in.)
I can't think of any other contemporary measure of desperation that so neatly encapsulates the stupidity of the whole system.
Allegedly:
1) The roads are overcrowded (lets tax people onto public transport) 2) Cars damage the environment (lets tax them out of existence) 3) We are running out of oil (lets tax them out of existence) 4) We can't be bothered to police the roads properly (lets fine them out of existence) 5) Tax, tax, tax, fines, fines, etc.
So, the whole idea of car ownership was being touted as polluting and antisocial.
Why did people stop buying cars? Because the government engineered a situation where the backbone of new-car-buying private car ownership, those who change every 3 years, are looking at serious negative equity on the loans they fund the cars with. Most people won't get burned twice. So, instead of turning in a perfectly acceptable car for the latest model in return for a sustainable monthly outgoing, people are typically staying away from showrooms and sticking with their existing, at least until the negative equity is worked off. The government has effectively weaned people off buying cars, instead of weaning them off using them. Idiots.
So now, with the double whammy of soaring oil price last year, carbon related taxation, the credit crunch was the icing on the cake. For typical regular new car buyers, there never was a problem with credit, but they witnessed a bloodbath in their equity. In that environment, you walk into a showroom, hear the bad news about what your 3 year old car is worth, and disappear, with little incentive to return.
Scrappage is such a stupid idea, it proves that we in the UK are governed by incompetents. We fund a raft of cheap Korean and bottom rung Euro (but no UK built) models onto the roads, increase the level of long term borrowing amongst the lower income higher risk sector, further inhibiting their disposable income for use elsewhere in the economy.
We pollute by scrapping cars, we pollute by building cars.
But now, we tax existing drivers to fund a horde of new cars onto the road, to be funded by new borrowing. Be in no doubt, it isn't the 'government' who is funding this 'initiative', it is you and me.
So we are taxed as a disincentive to buy, yet we provide incentives to buy? Crazy.
I'm not disposed to flights of Bilderberg conspiracy fancy, but simply put it down to astonishingly incompetent management. However, you have to ask, who benefits from this scheme. It isn't the populace or the real economy.
At a guess, I'd say: Increased tax revenue, increased borrowing to international banks, and Far Eastern car manufacturers.
The only winners in the UK are scrap dealers and car salesmen. Hardly the backbone of the economy. The net outcome will be a flood of money out of the UK, and massively increased levels of personal debt in a new sector of the poulace who can least afford it. It's verging on criminal.
Daft idea, really. Apart from the dubious green credentials of the scheme, how are kids going to get their first car? No-one is going to flog their old car for £500 to a neighbour's kid when they can get 2 grand FROM YOU AND ME by trading it in.
Location: Back in the land of the singing aardvarks looking for the escape hatch.....
Age: 42
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I suppose there'll some sort of small print saying you have to have owned the car before the date of the budget or summat similar. Be interesting to find out though. My question is, will the date set for the cars to be over ten years old be a rolling date or will they have a set date? Remember that these are the people who introduced a zero rate of VED for cars over 25 years old and then fixed the date (to somewhere in 1973 if memory serves) when they found out how much money they would lose out on.
