Car scrappage scheme explained

The Government announced the car scrappage scheme in the April Budget whereby from today, 18 May, a £2,000 discount will be offered on a new car for those scrapping their old car. What are the details though?

Car scrappage schemeThe car scrappage scheme runs from now until March 2010, or sooner if the allocated government funding of £300 million runs out.

The £2,000 scrappage discount is made up jointly by the Government and the motor industry, each paying £1,000.

The scheme is voluntary but all the major car manufacturers have signed up for it, including Audi, BMW, Ford, Honda, Mercedes, Nisaan, Peugeot, Renault, Skoda, Toyota, Vauxhall, Volvo and Volkswagen.

In fact many are planning to add their own sales incentives on top of the car scrappage to try and boost new car sales.

To qualify the car or van must be 10 years old, or to be exact registered in Britain on or before 31 August 1999.

The old vehicle must also meet other criteria, including

  • be a car or van up to 3.5 tonnes
  • have DVLA documents in the name of the customer buying the new car and for the customer to have been the registered keeper continuously for at least 12 months
  • have a current MOT certificate

The new vehicle must meet certain criteria, including

  • Weigh under 3.5 tonnes
  • have a first registration date in Britain of 18 May of later
  • must be new and not have any former owners
  • be built to British specification

Also the same person must be scrapping the old vehicle as buying the new one.

If you want to participate in the car scrappage scheme the easiest thing to do is to first check with your car dealer to see if they are participating in it.

If they are they will take care of all the paperwork, check that your old car and new car meet the scrappage scheme criteria and arrange for the old vehicle to be taken away.

Be aware that the price comparison website uSwitch has suggested that on average it will take 88 days after buying a new car for the car scrappage scheme benefit to be wiped out as the new car loses value through depreciation.

However, the AA has suggested this is misleading and believes the scheme will benefit many.

There’s also the question of the cost of the new car insurance to consider and of course how it will be financed.

There are plenty of websites available to get an online car insurance quote.

There are also car insurance comparison websites, such as Confused.com or Gocompare.com from which you can quickly and easily get a range of car insurance quotes and see what’s best for you at what price.

Of course, it might also be worth getting your old car valued before entering the car scrappage scheme – it could just be worth more than £2,000!

All in all there is broad belief and hope that the car scrappage scheme is good news for both consumers and the UK motor industry.

As Lord Mandelson said on Sky News ‘It will not just be a great bargain for the motorists, and a great opportunity for them to seize, but of course it will be a great boost for those hundreds of thousands of people who work in, or are dependent on, the car manufacturing sector in our country, so it is a win win all round.’

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  1. Car Scrappage Scheme 10th June 2009

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