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Cash may run dry for those interested in scrapping their old cars

May 21, 2009 by admin  
Filed under News, News-Insurance

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Following the budget last month, the Chancellor of the Exchequer, Alistair Darling, announced the launch of a car scrappage scheme. The scheme was designed to encourage motorists to get rid of older, environmentally unfriendly vehicles and buy new vehicles that were greener and more reliable.

Another purpose of the scheme was to boost the flagging motor industry, which had seen sales plummet during the recession and had been calling on the government to introduce such a scheme.

The scheme had already proven very successful in other countries such as Germany, and the motor industry seemed delighted when the announcement was made that the scheme would be launched in the UK.

As part of the scheme motorists that have a car that is at least ten years old and that they have owned for at least one year could get up to £2000 for scrapping the car and buying a new one, with the money being put towards the purchase of the new vehicle. The cost of the subsidy would be shared between the government and the motor industry.

However, there are now concerns that there is nowhere near enough cash in the kitty to provide the subsidy for the number of people that are likely to be considering the scheme.

With the amount of money that has been put aside for this scheme, which is £300 million from the government and the same by the motor industry, only 300,000 drivers will be able to benefit from the scheme before the money runs dry, and officials said that this could leave around one million motorists in the lurch as they will not be able to take advantage of the scheme due to lack of funds.

One industry official said: ‘Our analysis shows very clearly that this number of car owners have the ability and are very likely to want to take part in the scheme.’

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