AA encourages Government to introduce ‘new cars for old’ scheme

AA Personal Loans believes that cash incentives for owners of older, gross-polluting cars to scrap them in favour of cleaner, greener, safer models could bring a new car within reach of many families for the first time - and help to stimulate the UK's ailing car industry.

The concept of a ‘car scrappage scheme', presented to Business Secretary Lord Mandleson, is modelled on similar systems operating elsewhere in Europe.

The AA has discussed with Downing Street the concept that older cars should attract a Government-sponsored voucher to provide a £2,000 discount off a new or nearly-new model, provided the old car was scrapped.

Mark Huggins, director of AA Personal Loans, says that such a scheme would help kick-start the stalled motor industry, as well as help reduce CO2 emissions and improve road safety.

"The proposal ticks all the right boxes. I believe it would be a popular move and would allow many families to buy their first brand new car. A recent AA / Populus survey amongst over 17,000 drivers showed that 28 per cent said they would consider taking advantage of such a Government incentive to scrap older cars."

He added: "A scrappage scheme would also help consumers obtain loans to purchase new cars and it would make a huge difference when it comes to choosing a new or nearly-new car. AA Personal Loans monitors car buying behaviour through the CPI (Car Purchase Index) and it is clear that economy in now more important than reliability when it comes to making a car purchase decision.

"We think that owners of older, larger cars which now have little value will particularly benefit. A £2,000 incentive, coupled with a typical car loan of £8,000 over five years, will bring within reach a brand new car that is cheaper to run and tax and kinder to the environment."

A successful scrappage scheme in Germany offers up to €2,500 for cars over nine years old and has already seen an estimated 400,000 old vehicles scrapped. The SMMT (Society of Motor Manufacturers and Traders) estimate that such a scheme in the UK could stimulate 280,000 new car and van sales.