The Scrappage Scheme

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From the Guardian, Budget 2009: car industry welcomes scrappage scheme

So in the UK (and apparently elsewhere in Europe similar policies are being put in place) ... from the article

"Motorists will receive £2,000 if they sell their old car and buy a new model, after the chancellor bowed to pressure from the automotive sector and announced a car scrappage scheme this afternoon.

Car and van owners whose vehicle was bought more than 10 years ago will be given £2,000 towards a brand new vehicle. The scheme will expire in March next year and follows similar moves by major European countries, including France and Germany.

But the car industry will have to contribute £1,000 to the grant and it will not be restricted to greener vehicles. The "cash for clunkers" programme will also be markedly smaller than Germany's, which is investing €5bn (£4.49bn) and has boosted sales by 40%. By contrast, the UK version will cost £600m (£300m from the government) and will end earlier than expected if the money runs out before March."

This is being paid for with an increase in fuel duty to 71%.

So UK is increasing marginal cost of traveling (higher gas tax), and lowering the upfront cost of newer (and presumably more fuel efficient and environmentally sound and safer) vehicles while stimulating the domestic (and international) auto sector.

It seems more productive to stimulate the auto sector in this way than nationalize it as the US has.

1 Comment

Of course this is great news but despite a perfect credit rating, my application for finance was still declined because I am self employed and I do not have 3 years full accounts.

I really wanted a new car but quite frankly I am gutted by this.

Andy

David Levinson

Network Reliability in Practice

Evolving Transportation Networks

Place and Plexus

The Transportation Experience

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Assessing the Benefits and Costs of Intelligent Transportation Systems

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This page contains a single entry by David Levinson published on June 4, 2009 8:39 PM.

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