Subsidy makes new cars cheaper than second-hand

Car buyers who can take advantage of the Government's car scrappage scheme – which pays up to £2,000 to people who scrap cars over 10 years old when buying new – may be better off buying a new vehicle than a nearly new one, according to What Car? magazine.

Some popular models such as the Fiat 500 and Volkswagen Golf can be bought new under the scrappage scheme for less than a used version that is up to a year old. A Fiat 500 1.2 Pop (08 plate, 23,000 miles) will cost from £6,995, while the same car new costs £295 less with a scrappage grant.

"It's a bizarre market this year: new car prices have already risen by 9.5 per cent, but used car prices are an astonishing 30 per cent higher than a year ago," said What Car? editor Steve Fowler. "Nearly new cars represent excellent value, but not right now."