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Scrappage scheme leaves unanswered questions

So, the baby we have been expecting for so long has finally been delivered.


How many of us can say the scrappage plan is what we expected? How many of us can even say we know what we will be dealing with in a little over a fortnight’s time?

And how many dealers are happy with having to nursemaid, to quote Shakespeare, the “mewling and puking” infant?

One dealer told me that while he was outwardly positive about the scheme, there were serious concerns about how scrappage would work.

This dealer and a growing number in the industry are beginning to acknowledge that the VAT take for the Government from the anticipated surge in new car sales would line Darling’s rather empty pockets, exceeding the £300 million state contribution.

Serious questions remain unanswered:

How will dealers be recompensed for cars sold?
Will manufacturers reduce the margins on cars to pay for their contribution – will they be allowed to?
What are the VAT implications?
How much time will be spent on administering the scheme?
Also, the people targeted by the scheme are unlikely to have the money to hand to make up the shortfall between the scrappage ‘deposit’ and the remaining price of the car.

Like nearly everything today, the scheme’s success will revolve around the consumer’s ability to get credit.

You drive a 10-year-old car either because you love it or it’s what you can afford.

There’s the rub.

Let’s be prepared for the scrappage scheme to have a lot less impact than in Germany, but for it to provide an excellent sales tool.

The myriad of manufacturer scrappage-related schemes is adding to the confusion and consumers will be coming in loaded with information from now onwards.

On the front line, dealers will have to interpret this and seize the opportunity using all their business acumen to get the best they can from it – in other words, a skill they are well versed in already in this tough market.

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