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Gavin Green bids good riddance to the scrappage scheme
22 April 2010 09:19
Britain’s scrappage scheme has ended. It has undoubtedly helped to sell more new cars, has reduced the average CO2 emissions of the UK car pool (because new cars tend to be more fuel efficient than old cars, and because scrappage scheme buyers have typically bought smaller vehicles) and has thrown a lifeline to many hard-pressed new-car dealers.
Judging from the generally uncritical feedback from the mass media and the car industry, you’d swear this was one of the great economy-boosting ecology-saving government initiatives.
It wasn’t. Here’s why:
Claim: ‘It has been good for the UK car industry.’
Rather, it’s been very good for the Korean car industry. The biggest beneficiary, from the scrappage scheme, was Hyundai (43,947 cars sold up to early April, according to SMMT figures). The third most successful scrappage scheme seller was Kia (29,997). Market leader Ford sandwiched the Koreans.
These are astonishingly high figures for Hyundai and Kia, which have long been peripheral players in the UK car market, and have no UK manufacturing or engineering presence (and only a limited European operation). Their 2008 market percentages (before any scrappage scheme benefit kicked in) were 1.32% and 1.47% respectively. Scrappage buyers have typically chosen cheap, small new cars – in which the Koreans specialise. Britain, on the other hand, specialises in pricey premium cars, which have seen little or no sales uplift.
Mass makers, with either manufacturing or engineering footprints in the UK, have been helped by the scheme. These include Ford, Vauxhall, Nissan, Toyota and Honda. Their percentage uplifts, however, have been far more modest than those enjoyed by the Koreans. Most of their cars that benefited from scrappage have been cheaper models – which are typically not made in the UK. Hyundai actually sold more cars, through scrappage, than the total number of UK-built cars sold through the scheme.
Claim: ‘It has been good for dealers’
For many new-car dealers, yes. Although after the party, we now have the hangover: many car bosses predict high levels of dealer bankruptcies later this year, as the market dips following the end of scrappage. So, in some cases, the scrappage scheme has simply delayed the inevitable.
For used-car or non-franchised dealers, and other smaller garages – which make up the bulk of the UK trade – scrappage has been bad news. The scrappage scheme has destroyed almost 400,000 used cars, many of which were well-tended, perfectly serviceable vehicles. Without a scrappage scheme, used-car dealers would have profited from such vehicles. Equally, small garages, which specialise in repairing and servicing older vehicles, have seen almost 400,000 potential jobs go to the crusher.
Claim: ‘It’s got a lot of smoky old cars off the road’
Most customers who bought cars through scrappage were older people (60% were more than 60 years old, according to the Government). They typically had well-tended 10-year old vehicles. Smoking old clunkers, which just squeeze through their MOTs, tend to be owned by younger more impecunious people. They can’t afford a new car, scrappage scheme or not.
Claim: ‘It’s good for the environment’
New cars are cleaner and generally more fuel efficient than 10-year old cars. According to the SMMT, average CO2 emissions of cars bought under the scheme were 132.7 g/km, 27% better than the average scrap car’s figure. This is obviously good news.
Manufacturers, and the SMMT trade body, typically claim that 60-85% (figures vary from maker to maker) of a vehicle’s lifetime CO2 emissions come through use.
But these figures are disingenuous. They take into account the total CO2 generated in the car factory, during manufacture. But they rarely take into account a supplier’s CO2 or the road or sea transport involved. They never take into account the energy used to mine and refine and to transport the raw materials, or the CO2 used by car company staff to get to work or the bosses jetting around the world.
Plus: what can be the environmental sense in scrapping almost 400,000 mostly good used cars? The Western world’s throwaway culture is surely the greatest environmental evil of all.