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YOUNG AT HEART: Scrap scrappage

Date: 24 March 2009

Tristan Young is Editor-in-chief of BusinessCar

You'd have thought the Government would have learnt its lesson about not moving quickly enough to support the motor industry after the flack it has taken about delaying funding help for the development of greener models.

Even business minister Lord Mandelson admits that the Government should have acted quicker in this respect.

So it's amazing there's not been a swifter announcement about a scrappage scheme, which is now rumoured to be included in the 2009 Budget on 22 April, but wouldn't come into action until the middle of the year.

For the small number of people who own an older car and who can afford a new one, this news will be similar to the effect rumours of a stamp duty 'holiday' had on the housing market last year - it ground to a halt.

According to some in the industry, a scrappage scheme could see the predicted 1.7m new car market rise to 2m this year, an increase of 300,000 cars, or about 1% of the UK car parc.

This is a one-off boost, forcing the market forward, but after all the qualifying people have swapped their cars then the market will drop back to its natural level.

All this means for fleets is even more uncertainty in terms of future residual values, as Cap's Mark Norman recently warned the BVRLA, despite the association's support of a scrappage scheme.