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90 per cent of scrappage scheme cars were additional sales

14th June 2010 Print

The scrappage scheme should be viewed as one of the most successful ever collaborations between car manufacturers and government, according to Glass’s.  In a major new study of the UK car market, Glass’s states that the scheme not only stimulated new-car sales at the lowest point in the recession, but is likely to have done so without any significant ‘pull-forward’ of future new-car sales – unlike certain other European schemes.

The findings, which draw on information gathered from car manufacturers after the scrappage scheme closed, reveal that fewer than 10 per cent of customers who bought under the scheme planned to buy a new car in future years.  Without the £2,000 incentive, the vast majority of buyers would instead have chosen to purchase used cars when the time came to change their vehicles.

This runs contrary to speculation and fears from some quarters that the Government-backed programme would pull forward sales from later in 2010 and beyond.

The findings are included in a major new Glass’s report, entitled ‘The UK Car Market – managing a sustainable recovery’.  The report provides a comprehensive analysis of the turbulence experienced in the industry over the past two years, setting that turbulence against an historical perspective, and forecasting prospects for the industry in the short and medium term.  Among the forecasts are anticipated residual values and sales volumes for each vehicle segment and for each manufacturer.

“The scrappage scheme was a great success as a stimulus for the industry during difficult economic times, generating much-needed showroom traffic and car sales,” commented Andy Carroll, managing director at Glass’s.  “Close to 400,000 cars were registered under the scheme, but only one in 10 of these could be said to have been pulled forward – in contrast with experiences in other European markets.  The German scheme, for example, brought incremental sales of 700,000 units but it is expected that around 200,000 of these would have taken place during 2010.

“Now that the UK scheme has ended, the market is once again exposed to lacklustre demand for new cars, reflecting prevailing economic uncertainties.  The underlying recovery, which will not have the benefit of any further artificial stimulus, is expected to be slow and protracted.  The new-car market will emerge more slowly than it did in the post-recession mid ‘90s, and we expect similar prospects for the used car market.”

The research also uncovered that only 20 per cent of those who purchased through the scheme in 2009 had intended to buy a new car last year.  In light of this, Glass’s estimates that the total volume for 2009 would have reached 1.78 million units without the scheme, whereas registrations actually hit 1.99 million units.