Car scrappage scheme - Good or bad idea - 6 months on

Back in April I blogged some thoughts about the then impending car scrappage scheme . I was one of the more sceptical commentators at the time and despite the obvious registration success that it has been I still have the same reservations now as I did then.

I shared my concerns around the medium and long term effects of the scheme for the motor industry and the wider economy. I also doubted if it really was that much of an incentive, when so many manufacturers were, and still are, increasing their list prices. However many more motorists than I, or most people genuinely thought, have taken up the scheme.

Demand has unsurprisingly been for the smaller cars, with the Korean manufacturers in particular making some significant additional sales. The scheme has without doubt saved hundreds, maybe thousands, of UK automotive jobs which is obviously welcomed as the sector was a very early casualty as the UK economy started to struggle. The August registration figures would have been a total disaster were it not for the scrappage registrations and September will have undoubtedly been saved by it too.

Lots of motorists have also benefited from the joy of getting a new car, which is a treat most of us never actually get to enjoy, without costing the wider tax payer a bean. Thanks to the Government only contributing £1000 of the £2000 grant any burden that the taxpayer might have had to shoulder has been negated by the VAT revenue from the new car sale

So with all this good news am I just being a bit moody as I hadn't recognised the scrappage scheme would be a success?

No. I am genuinely pleased for the UK motor industry and all who work in it for the time the scrappage has bought their dealerships. It has given many groups the space to get their property portfolios and cash flow back on an even keel. My concerns remain about what the real demand for new cars looks like,particularly once VAT reverts to 17.5% again, but I am now more positive about the dealers robustness as they go into life after the scrappage scheme

For an excellent alternative view on Life after the Scrappage scheme read "Scrappage What Happens Next?" from Motor Trade Insider