If it ain't broke

Andrew Williams | 13 years ago

Should the UK car scrappage scheme be thrown on the scrap heap?

Since its inception in April, the UK scrappage scheme has encouraged consumers to order more than 35,000 new cars, an impressive 20 per cent of all cars sold during the period. The scheme, jointly financed by car manufacturers and the UK government, entitles buyers to a discount of up to £2,000 off the cost of their purchase when they scrap vehicles over nine years old, encouraging take-up of newer, more energy- and carbon-efficient vehicles.

The initiative has been broadly welcomed by the automotive industry, with Paul Everitt, chief executive of the Society of Motor Manufacturers and Traders, boasting that the scheme had enjoyed a ‘very encouraging’ start – via increased orders, visits to car dealerships and online inquiries. The praise was echoed by a spokesman for the British Chambers of Commerce, who pointed to the scheme’s contribution in ‘providing the embattled automotive industry with a much-needed boost’.

However, against a backdrop of almost universal industry enthusiasm, a more detailed analysis of the scheme reveals a number of short- and long-term economic, social and environmental impacts that are far from laudable. Firstly, critics have pointed out that scrappage schemes are a very expensive and inefficient way of cutting carbon emissions. According to environmentalist George Monbiot, the UK approach costs in excess of £500 to cut each ton of carbon dioxide: ‘way more than a lot of other ways of reducing our carbon emissions’.

Moreover, a recent survey of car dealers and manufacturers found that most new-car buyers taking up the £2,000 trade-in offer will end up paying more than if they simply found the best cash deal. Third, the scheme reinforces the notion that cars are a throwaway commodity, much like any other product that consumers buy on a daily basis. According to industry analyst Dr Peter Wells, ‘telling customers that their most expensive purchases after their houses are scrap after only eight or nine years is a terrible message that completely belies the huge strides in quality and product longevity that the industry has collectively made’.

So, the next time you see one of those siren newspaper ads encouraging you to trade in your old banger for some new-fangled wheels, be aware that the offer might not be as straightforward and sensible a deal as you might imagine. Finally, at least, the scheme will, perhaps inevitably, lead to a discrediting of the automotive industry’s claim to be a product of laissez-faire capitalism. The fact that large sums of public money have been used to prop up an ailing car sector is likely to mean that, in future, governments will be more forceful in demanding that the automotive industry works toward wider social goals.

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Andrew Williams