Car Scrappage Scheme… The Real Story??

Car Scrappage SchemeIs It Working?

Being at the sharp end of new car sales, we have been watching the unfolding scrappage scheme with interest. The ‘PR’ is that the scrappage scheme is brilliant for all concerned but, from what we can tell, it is hardly that, is tailing off rapidly and both customers and dealers are not getting the deals they expected.

Does it Help Dealers?

The overall answer to this seems to be ‘no’. Why not?

  • The administration time for these sales, both in negotiation as well as transaction, is much higher than for other sales
  • The deals are not as straightforward, because there is blurring of where the discount can be applied, and where not, and to what extent the full £2,000 can be claimed
  • The profit margin for these sales is negligible, and on top of that some manufacturers are not giving bonuses to such sales, or inflating sales targets in this difficult marketplace
  • Furthermore, the vast bulk of sales are on the smallest cars, so it is more about the cheapest possible new car purchases, not helping with the range of cars that a dealer needs
  • 25% of dealers have reported no change in footfall and sales – so it’s not the silver bullet that all were hoping for
  • It is not really a ‘green’ measure as evidence still is that the best you can do is to hold on to your car and delay your purchase. The manufacturer of a new car is very carbon-intensive, far outweighing the emissions benefits. Not to mention the environmental ‘cost’ of scrapping your car

Does it Help Customers?

If you are a customer looking for a new car and have a scrappage car available to you, then we recommend that you choose the franchise very carefully. The stats from the AM-Online website are very revealing as the car makes which are outperforming the market are also the ones being as straightforward as possible with you. Manufacturers like: Chevrolet, Kia, Hyundai, Skoda and Toyota are the ones benefiting. Others, who we won’t name, but who are not really offering the full discount, or forcing the buyer into certain models of car whose MRRP have mysteriously increased over the last few months, are not benefiting.

If you are a customer just looking for a new car, then we hope that the dealer has enough time to deal with your custom as they are currently snowed under with unprofitable and time-consuming management of these scrappage offers.

So, What Is the Verdict?

Our verdict, given that all manufacturers have been raising prices across the board over the last four months by between £500 and £1,500 it seems this ‘deal’ is not all it has been cracked up to be. In fact, net, the consumer is worse off as a result of all this.

Furthermore, whilst 30,000 sounds like an impressive figure, this is from launch (over two months ago) and is the total sales figure for the entire country. Interest is already tailing off, and we expect that this scheme will slowly fade away, with dealers being left in the same position of trying to sail through difficult waters…

As always, we can help. Call 0845 680 3100 to speak to us about how we can help dealers promote themselves online.


Comments are closed.