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The Scrap Scheme For Used Cars - How it Works?

After months of discussion about introducing the scrap scheme in GB and NI, the initiative has finally been introduced. After dramatic news from the industry that were coming in the previous months and the analysis of the situation in the countries that have already decided on incentive schemes, the Government decided to place it in the budget and the plan has now reached the implementation phase (started on 18th May). The initiative was designed to stimulate the used cars market in NI and GB and encourage users to switch to more environmentally-friendly models.

The rules

The scheme will operate till the end of February 2010 unless the government funding runs out before that date. Under the scheme each owner of a car registered in UK before 31st July 1999 can apply for a �2,000 grant (�1,000 would by provided by the Government and the other half by the industry). What is important - the registered keeper needs to to have been the owner of the vehicle continuously for the last 12 months. This point was added to prevent those willing to buy new vehicle, to buy a cheap old car just to be able to scrap it. What is more, the person applying must have a GB or NI address. The scheme is not obligatory - manufacturers and dealerships are not obliged to participate. It will be dealers' responsibility to check that the vehicle being traded in, and the new one being bought, qualify under the scheme as well as arrange for the used cars to be scrapped.

The troubles

Not all the manufacturers have given a warm welcome to the scrap scheme though. Ford, Fiat and Honda decided to delay their deliveries to dealerships as they require more detailed description of how it will work. The most important disambiguation is VAT on the vehicles - not only the free manufacturers seek information on who will be paying this tax. Some experts worry that the scheme will be beneficial mostly to non-UK manufacturers as 80% of cars bought in Britain are imported. The government however claims that most of the cars would have at least parts produced in UK.

The results

The scheme is expected to give similar outcomes to those observed in Germany, where new car sales soared by 40% in March this year. The UK motor industry is in deep crisis and new car sales have been going down for the last 11 months. It is not possible though to predict at that point if the scheme will be so successful and how it will affect the interest in used cars in NI and UK. The dealers confirm that since the introduction of the scheme was announced, there has been an increase it the number of potential customers' visits. Time will tell how many of them will take advantage of this opportunity. According to the AA the scheme could pump as much as �2bn into the car sector, an the survey undertaken by the organisation has showed that only 1% of motorists definitely plans to take it up, however still it is enough to use up all the budget for that purpose. Manufactures and dealerships are optimistic.

To see a comprehensive list of quality new and used cars in NI visit UlsterCars.co.uk.