UK Car Sales See First Rise Since April 2008
Back in May, the Government launched a scheme that would reward car buyers when they scrappage their old bangers. Oddly enough it was called the ‘Car Scrappage Scheme’ and it gave car buyers 2000 towards a new car when they scrapped a car that’s more than 10 years old.
The overall cost for the scheme was 600 million pounds. Out of the total pot required to fund the scheme, half was payed by the tax payer, the other half was payed for by the car manufacturers. Even though this is alot of money, it seems to be paying off for the economy.
The overall amount of new registered cars for this July was announced the other day and they showed a rise of 2.4% compared to July last year. Overall, 157,149 new cars were registered in July, making a 2.4% on July 2008. Over 33,000 of the total cars registered were bought as part of the government’s scrappage scheme. Although a 2.4% rise is not a huge number, it’s still good news because it’s the first rise in car sales since April 2008.
Due to the good results the scheme has created, many MPs are looking to extend the scheme for throughout 2010. The scheme is currently set to end by February 2010 or when the tax payers 300 million runs out. With around 144,000 new cars registered with the scheme since it started, I wouldn’t be surprised if they continued it into 2010.
If the scheme is continued, car manufacturers will be hoping that the rise in cars registered will continue as more people buy into the scheme.
Although this is good news for the new car industry, there are some downsides for other sectors. The second hand car market is the first one to be effected. Due to the large number of cars being scrapped, the amount of second hand cars on the market are being reduced. The second problem occurs with the cheap car leasing market.
Because many people are opting to buy a new car rather than lease, many leasing businesses are loosing out as people choose not to go for a Nissan lease when they could just scrap their old car and get more money than it’s worth off a new car. This problem doesn’t so much affect the van contract hire sector which doesn’t yet benefit from the scrappage scheme.
