Plans to offer up to a £2500 incentive to swap old cars for new now gains ground.

A scheme to give buyers up to £2500 when they trade their old bangers for new cars is gaining Government support.

The cash-for scrap payment would be tax-payer funded and is intended to give the car industry a much-needed kick-start. Similar schemes have operated successfully in other European countries where car sales had been badly hit by recession. In Germany, where payments have been available for some months, car sales rose in February by 21%.

By contrast, in the UK the total sold fell by 21%, the 10th monthly drop in succession. Plans to adopt such a scheme for the UK have been discussed for weeks, gaining the support of car retailers and motorists’ organisations.

The idea has also found favour with some eco-campaigners, because it will take older, high-polluting models off the road and replace them with new models which are far ‘cleaner’.

But initially, the Government’s reaction was luke-warm. But with thousands of cars sitting unsold at factories and in storage, the mood has changed. And Toyota’s announcement today that it has agreed a 10% pay cut with its UK workers in return for fewer hours points to the need for urgent action.

The Government told the Daily Mail that while it wasn’t yet ready to announce such a scheme, there had been a ‘change of heart’.

The scheme, it is thought, would apply to cars over nine years old. A level of payout hasn’t been set – but the feeling is that it would need to be at least £2000 to be effective. In Germany, buyers get the equivalent of £2500. In France, however, a similar scheme pays buyers only £1000 – and it has proved far less successful.

Stephen Jury


March 11, 2009