Risks of Car Scrappage Scheme

There are a couple of risks that accompany the scrappage scheme for both the consumer and the economy.

The car rental and leasing body has reportedly expressed their concerns that the scrappage scheme will negatively impact the second hand market. They have highlighted the fact that the British government has followed the German model which has been regarded as discriminatory to the countries used car industry. This significantly limits the success of the scheme counteracting the increase in new car sales with slumps in second hand market.

The chief executive of the car rental and leasing body has also reportedly raised concern over security of British workers’ jobs in the motor manufacturing industry, as the vast majority of new cars purchased in the UK are made overseas. Additionally, suppliers and garages could also be affected by the repercussions of the initiative, in that the mass-removal of old cars from the road will cause a fall in demand for spare parts and workmanship.

One representative of the RAC Foundation reportedly commented that before the scheme was introduced a significant proportion of the cars currently on the road were over ten years of age and many over fifteen years old. He added that the scrappage scheme could run the risk of removing many perfectly good cars from the road which could be an unnecessary waste.