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Used Car Market Analysis: Scrappage scheme still making headlines

The car and van scrappage scheme is still in the news thanks to some PR from the Whitehall.

But May’s new car registrations have proved that the Government was overstating the fact that 35,000 orders were taken under the scrappage scheme just two weeks in.

The national media seemed keen to report this story, spoon-fed by the Department for Business, Innovation and Skills, but even the SMMT was cautious when asked for comments.

Time will tell, of course, but anyone connected with the industry must have realised those 35,000 orders would take a few months to filter through as registrations.

With the market still showing a marked decline compared with last year, we’ve seem some nonsensical reports from some manufacturers claiming the scrappage scheme has already helped them gain market share.

The scheme will be disappointing to many. Germany’s scrappage scheme includes buying cars up to a year old.

Many of the self-registered delivery-mileage family cars sat at main dealers with more than £4,000 off the official on-the-road price would have disappeared far faster if the scheme was not aimed solely at unregistered vehicles.

Then there was the proposal from fleet operators to include defleeted ‘used’ vehicles on a sliding scale of ‘scrappage’ allowance, which would have given far more owners of older, more polluting cars the opportunity to trade them in for a well-maintained, ‘affordable’ newer model.

It would have created further interest and helped fleets recover some of the dramatic losses experienced through falling residual value forecasts. This proposal was ignored.

We’ve seen innovative finance schemes where manufacturers can manipulate and attempt to recoup the £1,000 contribution to the allowance, and rising list prices blamed on exchange rates.

Although it looks as if the scheme has genuinely led to increased interest in car buying, whether customers qualify or not, it is very unlikely to replicate the success of the German scrappage incentive.

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