Car scrappage price hike schemes

The car scrappage scheme may have revived interest in the new car market, but Which? Car has found that some manufacturers have raised their list prices by as much as 14% meaning buyers are often no better off.

The price of a mid-range Ford Fiesta has jumped from £11,570 in October 2008 when the car was launched to £13,195 in July 2009 – a massive 14% increase.

Vauxhall’s new Insignia looked affordable in January 2009, priced at £17,981 but it has now broken the £20K barrier with a list price of £20,430 in July 2009, also a 14% jump.

Another chart-topping supermini, the Nissan Micra, was priced 11% higher in July 2009 (£12,395) than in September 2008 (£11,200), although its equipment has been improved. (See overleaf for other examples).

It appears manufacturers are inflating prices just when the scrappage scheme requires them to chip in at least £1,000 worth of discount on a new car.

The reality is more complicated – global economic conditions have forced a rethink of UK car prices. But some manufacturers have managed to resist price increases despite the rising costs of raw materials and spiralling exchange rates.

Hyundai’s i30, a Which? Car Best Buy, has gone up just £35 (0.3%) since September 2008. And Volvo has actually dropped prices since last year on some models – one XC90 version was £970 (-2.5%) cheaper in July 2009 than it was in September 2008.

Which? Car recommends that buyers should consider nearly new cars that take advantage of earlier, cheaper prices – and offset some of the depreciation on a new car.

Richard Headland, Editor, Which? Car, says: “Most buyers are being attracted by the £2,000 discount on a new car, and the scrappage scheme can offer some good deals. But with new car prices being hiked up, the scheme can be a false economy. Do your homework, as a pre-registered or one-year-old car may offer an even better deal.”