Scrappage scheme success at what cost?

The decline in new car sales is at its slowest rate for almost a year, a reversal of fortune that is partly attributable to the £2,000 scrappage scheme.

The Society of Motor Manufacturers and Traders (SMMT) reported that 176,264 vehicles were sold last month, 10 per cent of which had been bought through the scrappage scheme.

However, despite new car registrations falling by 15.7% in June compared with the same month last year, a marked improvement on the 25% drop in May, the scheme continues to be criticised on environmental, social and economic grounds.

The environmental impact of scrappage schemes

Scrappage schemes are often described as environmentally friendly because they get older vehicles off the road by scrapping them and replacing them with the latest models, but studies have found that these schemes have a relatively high cost per tonne of pollution avoided.

The British scheme does no more than assume that the new car is less polluting than the one it replaces and completely overlooks the environmental impact of scrapping the old car and building the new one.

A spokesperson for the Environmental Transport Association (ETA) said: “There are lots of 10-year-old cars with plenty of life left in them and from a climate perspective, to send them to the scrap heap is money poured down the drain.”

Car Scrappage: economic nonsense?

A study by a German economics institute has criticised scrappage schemes for the way in which they distort competition and create the need for further state intervention and compensatory measures in other branches of the economy.

The Halle Institute for Economic Research says of the German scrappage scheme: “Behind these payments stands nothing more than the subsidising of an individual branch of the economy – with all the negative distorting effect that such favourable treatment brings…”

Save money – extend the life of your car

Changing a car frequently has a financial as well as environmental cost; drivers who buy a car new and then trade it in after three years incur a cost of as much as 50% in depreciation.

A good car warranty from a reputable company minimises depreciation and can make your driving greener by extending the useful life of your car

Related articles:

• Bentley, Porsche and Rolls Royce sign up for ‘green’ scrappage scheme
• Car scrappage – How to waste public money quickly
• Car scrappage scheme should apply to bicycles
• Green driving means keeping a car longer
• Government chooses eco-driving over tax revenue
• Green driving tips

What is the ETA?

The ETA provides motorists and cyclists with green breakdown cover and insurance products.