The scrappage scheme is a poorly devised idea to save an industry hell bent on targets and volume. And its arrival will debase the entire new and used vehicle market.
Sales of older cars and vans have thrived through the recession - one of the few areas to survive. The sub-£2k markets enjoyed growth, with Manheim Auctions and British Car Auctions citing increased bidding and residual prices, while over-priced late-year [two to three years old] stock hit the rails and much of it would have required finance to purchase. That is another story.
Constant over production, with aggressive pricing and little forethought for a rainy day, will again be rewarded with subsidies from the government, and manufacturers who cannot meet the expense of it.
Entrepreneurs, who pick the bones out of the mess created by a negligent, target-driven auto industry have kept the bottom end of the market moving so the top end can make new sales. Part-exchange, scrappage in another name, stops manufacturers from pulling the rug from under their own feet because it keeps the market rolling. Scrappage is an end in itself.
Finance houses and leasing companies will also collapse if their pre-written residuals, which are already in trouble, have nothing underneath to prop them up.
The cheap end of the market, although not desirable to the wealthy few, are a lifeline to masses who can ill afford to be tempted into further debt by a £2k carrot.
