Call for UK car scrappage scheme to be extended

Glass’s, the publisher of used car price guides and other car market data, has called upon the government to extend its “cash for bangers” scrappage subsidies in order to avoid a damaging dip in demand when the scheme ends.

The company says that on current trends, the funds allocated to the scheme by the government to subsidise new car purchases will run out in October 2009, well before any expected sustained recovery in the economy. Higher new car prices and the ending of the temporary 2.5% VAT cut at the turn of the year are likely to choke off demand further. Glass’s suggests that the scheme should also be altered to cover slightly younger cars, and vehicles standing on the nation’s driveways without MoT certificates.

From the very beginning, the question of how to end the scrappage scheme without causing too much market disruption has been causing headaches. One alternative to the Glass’s proposal that has been suggested by industry figures, is to taper off the incentives provided under the scrappage scheme, with any new tranches of aid providing support to new car buyers at successively lower levels.