The truth about the UK's scrappage scheme

Published: 06 October 2009

I’m very pleased to read that the scrappage scheme has done wonders for the British motor industry. The FT, the BBC, The Guardian and the Society of Motor Manufacturers and Traders (SMMT) all say so, so it must be true.

Yet, dear reader, let me share some sales statistics. They suggest that the scrappage scheme – in which you get £2000 off the price of your new car if you trade in a 10-year-old banger – has been very good news indeed for Korea’s car industry and it’s also provided a useful boost for the Japanese. Alas, it has not been quite such a blessing for UK Plc. The Asian makers’ speciality, of course, is small inexpensive cars – exactly the sort of machines you’d expect to benefit from the subsidised destruction of old cars. (Not too many Jaguar buyers tow their banger to the dealer as a trade-in.)

Hyundai’s UK sales this year are up 69%, the best of any mass maker. Kia’s are up 32% (little wonder that the first car maker to rush out a press release ‘welcoming’ business secretary Lord Mandelson’s recent extension of the scrappage scheme was Kia). How those Korean car moguls must love Peter Mandelson! From prince of spin to king of Seoul! Chevrolet (née Daewoo) has seen its sales dip by only 6%, despite all the GM-is-broke bad publicity. The overall car market, incidentally, has declined by 15%.

Meanwhile these are the figures for makers who both conceive and manufacture their cars in Britain. Aston Martin down 32%. Bentley down 54%. Jaguar down 18%. Land Rover down 24%. Lotus down 37%. Other British makers (Morgan and the minnows) down 21%. Mini, whose cars are made here, never mind that they’re engineered in Germany, has seen sales dip 14%. Vauxhall, which has a plant in Liverpool, but does all its engineering in Germany, is down 24%.

As a good European, Mandelson may also be concerned that his measures have done little to help his Continental friends. (Peugeot down 22%, Renault down 48%, Citroen down 21%, Volkswagen down 17%).

Naturally the scrappage scheme has helped many UK motor traders. The Japanese ‘transplant’ factories have also benefited, although as they tend to make more upmarket cars, not the inexpensive machines that have mostly benefited from the scrappage scheme, this has been muted.

Meanwhile, I read that manufacturing output in the UK collapsed in August 2009, dragging overall UK industrial output to its lowest level since 1987. How telling.

By Gavin Green

Contributor-in-chief, former editor, anti-weight campaigner, voice of experience