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RV expert reveals scrap worry

Date: 20 March 2009

Residual value expert Cap has revealed its concerns over the mooted scrappage incentive scheme rumoured to be under consideration by the Government.

A report in The Times claimed a £2000 incentive scheme for people to trade up from a car at least nine years old to one up to 12 months old is being considered for inclusion in the 2009 Budget, due on 22 April, ahead of a June introduction.

"Scrappage schemes pull new business forward at the expense of the future," Cap's operational development manager Mark Norman told BusinessCar. "It would make more sense to get people from a 10-year old car into a three year old, then those people could buy a new one."

Norman predicts a "negligible RV impact" if the scheme is introduced, predicting that there are "more dangers in RVs going south than north."

"The key to getting the market going is to get the confidence to the fleet market so they can start buying again," he said. "The private market will continue to buy smaller, cheaper cars."

Norman was also worried about the effect on the wider market.

"Scrappage will just confuse the market for a short amount of time," he said.

Germany has seen a 21% increase in new car sales following the introduction of a similar scheme, but Norman contends that external factors including improved lease rates have also impacted, and the sales lift isn't exclusively down to the grant programme.