New Scrappage Scheme: What Lies Ahead?
New Scrappage Scheme: What Lies Ahead? As the UK government desperately seek ways to achieve their net zero carbon emissions by the year 2050, the automotive sector often finds itself on the receiving end of attention.
Back in February, Prime Minister Boris Johnson announced plans to bring the ban on the sale of all new petrol, diesel, and hybrid cars in the UK forward from 2040 to 2035.
In order to hit their ambitious targets, many critics suggested that something more had to be done.
Rumours regarding the implementation of a scrappage scheme began to circulate however the likelihood of its introduction only began to look like reality following calls by the automotive sector three months into lockdown.
A report by the Society of Motor Manufacturers and Traders discovered that one third of the automotive sector remain furloughed while 6,000 workers have been made redundant.
A number of manufacturers have called for the scrappage scheme to be introduced, and fast!
With this in mind, Lookers, who offers Honda servicing, takes a take a look at the scrappage scheme introduced in 2009 and why now is the perfect time to by a new car.
2009 scrappage scheme
In 2009, under pressure from the automotive industry and in a bid to kick-start new car sales post-recession, Alistair Darling announced that a scrappage scheme would be introduced.
Motorists who traded in their old car and bought a new one received a reimbursement of £2,000–£1,000 from the government and £1,000 from the manufacturer.
The conditions of the funding were that the vehicle was more than 10 years old and they were buying a new vehicle. At the time, the introduction was widely welcomed by the automotive sector, with Chairman of the Retail Motor Industry Federation telling the Guardian: “The introduction of a vehicle scrappage scheme will boost the new car market, encourage consumers to get back into car showrooms, and reduce the likelihood of employee downsizing in this sector.”
The results were that 400,000 new vehicles were purchased before the scrappage scheme, 10 months later, was ironically scrapped.
Some of those who had purchased a new vehicle under the 2009 scrappage scheme could be in line to pick up a new one again under the planned 2020 update.
Why buy a new vehicle now?
You might think that the scrappage scheme is simply being used to salvage the automotive industry after a period of downturn.
In fact, you, as the motorist, will benefit far more — more than 20 councils across the country plan to introduce an ULEZ zone in the coming years, replicating that of what currently exists in London.
Back in April 2019, London Mayor Sadiq Khan introduced an ultra-low emission zone to centre of the capital. Any diesel vehicle not conforming to Euro 6 emission standards or petrol vehicles not conforming to Euro 4 is required to pay a daily charge of £12.50. For those travelling in and out of the ULEZ zone every day, a bill of £4,550 will rack up on an annual basis.
Of the 12.9 million diesel vehicles on British roads in 2019, 9.5 million would fall foul of ULEZ and be forced to pay this £12.50 charge. In order to help motorists avoid this charge, Khan announced a specific scheme operating for those in the capital in October 2019. Low income motorists would receive the same funding of £2,000 if they were to swap their older, polluting vehicle for a new low emission alternative.
As we’ve previously mentioned, these types of zones are expected to be introduced across the UK, with some Scottish cities planning a complete ban on vehicles which don’t fall within the emission boundaries. Taking this into consideration, getting rid of your old vehicle when you’re being offered money to do so seems significantly more appealing.
Moreover, this new 2020 scrappage scheme is set to offer motorists £6,000 back. However, despite being three times more than that of what is being offered by Sadiq Khan’s London-only scheme, the countrywide deal is being met with scepticism.
Effectively, the proposed scrappage scheme will only be valid for motorists looking to swap their Euro 1-4 emissions vehicle for a fully electric alternative. Experts at CarWow have noted that due to the particularly high prices of new electric vehicles, the £6,000 grant will not be enough.
Instead, suggestions have been made that the government extend the scheme to include plug-in hybrids too. Whatever way you look at it, car owners who live in city destinations or travel into them are going to brunt the effect of hefty ULEZ costs in the coming months and years, so why not make the most of an additional lump sum to help purchase a new vehicle?
If the scheme is to go ahead, does this mean the end for petrol and diesel vehicles? Obviously, new car sales are scheduled to be stopped by 2035 but such an introduction could see it occur considerably sooner!
New Scrappage Scheme: What Lies Ahead?