Motorists ‘risk being refused new car under scrappage scheme’

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Thousands of motorists wanting to trade in their old cars under the Government’s scrappage scheme beginning on Monday risk being turned down.

To qualify in the first place drivers will, under the small print of the scheme, be expected to register the old and new car at the same address.

Anyone failing to do so could be denied the £2,000 subsidy, which is being introduced on Monday, unless they can provide proof that they lived in both addresses.

In addition even those who do participate in the “cash for bangers” project will find that the subsidy will be wiped out within 88 days. According to one study carried out by the police last year, around 3 per cent of cars on the road are registered to the wrong address.

This is the latest in a series of problems to hit the £300 million scrappage scheme since it was announced in last month’s budget.

Car manufacturers came under fire when several announced price increases within days of the scrappage scheme, for which they had been lobbying, was announced.

Now uSwitch, a price comparison website, has described depreciation as the “thorn in the side” of the scheme.

New cars lose value as soon as they are driven off the forecourt and dropping in worth by 49 per cent in the first year.

In addition motorists can expect the cost of insurance to rise sharply because of the higher value of the new car.

The scrappage scheme has also been criticized by industry experts, such as Prof Garel Rhys of Cardiff Business School, who said it was just as likely to benefit overseas car makers as those based in Britain.

Nevertheless the industry voiced hopes that scrappage will kick start demand for cars in Britain, much as it has when it was introduced in Germany.

“Consumers have already shown great interest in the Vehicle Scrappage Scheme, with dealers reporting a marked increase in enquiries since the scheme was announced in the Budget in April,” said Sue Robinson, Director of the Retail Motor Industry Federation.

According to the Society of Motor Manufacturers and Traders, the industry has noticed a sharp rise in inquires from potential buyers.

They have provided welcome news for an industry, employing around 800,000 people in Britain, which has suffered 11 months of falling sales.

“The scrappage scheme is good news for consumers and the UK motor industry alike. It has already started to get people back into showrooms to kick-start demand in the market,” said Paul Everitt, SMMT chief executive.

“There has been a good response to the scheme ahead of the official start date and industry is confident that this will be translated into additional orders.”

Sourced via telegraph.co.uk