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This week the chancellor offered owners of old cars £2,000 to scrap them for a new model. But Tony Levene says the sums just don't add up
The car scrappage scheme is a load of old iron – and as the proud owner of a 15-year-old Volvo estate I feel well qualified to say that. The much-heralded scheme offers people like me two grand off a new car. But I can't make sense of it either economically or environmentally.
The idea is that motorists who can show they've owned a car first registered before 1 August, 1999, can apply for a £1,000 government money-off coupon redeemable against a new car. The motor industry comes up with the other £1,000, making £2,000 off the price of a shiny new vehicle.
The car has to have a current MOT, so you can't trade in an abandoned old banger, and you have to prove one year's ownership.
In all the government is chipping in £300m so there will be vouchers for the first 300,000 to apply. The scheme will end next March at the latest.
My old Volvo meets all the rules, but I won't be among that 300,000, despite enthusiasm from the usual suspects – motor manufacturers and importers, dealerships, finance houses, and insurers (who charge more for a new car than an older one). I can't think of many qualifying vehicle owners who will.
Trashing my 940 estate and taking the scrappage incentive simply doesn't add up. I'd have to buy a new car and it would have to be big enough to cart at least 20 bags of peat-free compost from the local B&Q or a load of camping gear and a few bikes. About the cheapest cars you can buy on the £2,000 voucher are the Hyundai i10 at £7,000 and the £6,195 Kia Picanto. But they're out of the question – too small and lacking the tank-like build of my Volvo.
A new Volvo equivalent to mine has a sticker price of £25,400. The scrappage scheme rules say you have to buy a new car, not "nearly new" or with "delivery mileage", so the usual discounts for canny buyers are not available. Even one reduced to £23,400 after the scrappage deal would clean out my bank balance many times over.
I could go for a cheaper make but I'm still looking at big money. In any case, my colleague Miles Brignall tells me car makers have been quietly pushing up prices by between £750 and £1,500 in expectation of the scheme. So the trade's £1,000 is covered by higher prices, while the government will get its £1,000 back (and more) in VAT on the new car. It's a fair bet dealers will see me coming with my voucher. So I won't get a bargain.
Then there's the question of insurance premiums. If I buy a new car, they will inevitably shoot up. No one is likely to cover a new car for the £240 I pay now. What about the environment? I don't know my car's CO2 emissions – it was constructed before emission numbers, and it only does 25 miles to a gallon.
But I don't feel guilty. For its age, it is a low-mileage car – less than 85,000 miles on the clock – and I only do 4,000 miles a year.
In any case, the energy involved in scrapping my car and buying another one is huge. That said, the government doesn't even pretend the scheme is designed to do more than "boost the whole motor trade".
But to end on a positive note, I know one potential scrappage customer. My neighbours bought their teenager a £50 car which is proving too expensive to insure. They could trade that in against a shiny new one for themselves.
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