Scrappage Scheme

The End of an Era – The Scrappage Scheme Ends

The end of an Era. Above, the Polo Blue Motion

At the end of March 2010 the UK Government announced that the UK Scrappage Scheme ends. Scrappage accounted for a fifth of cars sold after the scheme was introduced a year ago to help the recession-hit motor industry cope with falling sales.

The government estimates that 4,000 jobs with manufacturers and suppliers were supported by the scheme.�

The Chancellor announced in the Budget on 22nd April 2009, a voluntary discount scheme under which motor dealers would give motorists £2,000 or more towards a new vehicle if they traded in a car or van over 10 years old for scrap.

The scheme was launched on 18 May 2009 and lasted until the end of March 2010. It was announced on 28th September that funding was to be increased and would be available to scrap up to 400,000 vehicles, with  400m provided by Government and matched by support from vehicle manufacturers.

Latest News! Sept 28 2009

Lord Mandelson annouced today that the scrappage scheme, will be extended to include an additional 100,000 vehicles. New car buyers are still being offered £2,000 off although the age limit has been dropped to vehiclea at least eight years old (this is a change, as the limit had been 10 years).

Updated: Sept 2009

Why?

Many major economies have introduced scrappage schemes to boost sales, including the US, Germany and France. On the flip side, new cars are more economical than cars over 10 8 years old “or maybe not!” and has been seen as a good way of decreasing CO2 emissions and our thurst for crude oil

How it works:

Under the UK scrappage scheme, a £2,000 incentive is paid to motorists who scrap cars registered before 31 August 1999 to buy a new car. Half of the money is paid by the government and half by the car industry.  The US scheme provided the most generous incentive – $4,500 for certain cars.

How long will it last?

£300m has been set aside for the scheme by the Uk Government. It will finish on the 28th February 2010 or until the funding is used up.

Has it worked?

In July, UK car sales rose by 2.4%, the first rise since April last year. The success of the scheme has also been shown with the recent rise in 2nd hand car values due to a shortage of supply – it is also partly to do with firms delaying replacing company cars.

Other news & info:

The Department for Business Enterprise and Regulatory Reform (BERR) held a Motor Industry seminar on the 27 April 2009 detailing the key features of the UK Car Scrappage Scheme.

These are the notes from the official presentation to car manufacturers and dealers at this meeting

UK Car Scrappage Scheme – Key Features

  • Consumers will be offered £2,000 towards a new car or van if they trade in a 10 year old plus vehicle which they have owned for 12 months or more;
  • The scrappage incentive will be made up of £1,000 from the UK Government and £1,000 from the motor industry;
  • £300m will be made available to fund the scrappage scheme allowing up to 300,000 sales;
  • The launch date will be mid-May;
  • It will finish on the 28th February 2010 or until the funding is used up;
  • There will be price transparency for consumers, dealers, manufacturers and auditors of the scrappage scheme;
  • The scrappage scheme will be voluntary for manufacturers and dealers;
  • The scheme will apply to all the manufacturer’s models and not just selected ones;
  • There is no limit to the number of vehicles purchased per individual or business;
  • The scrappage scheme discount can only be used once per vehicle purchased – i.e. you can’t trade in two qualifying vehicles against one new car and get £4,000 off the price;
  • There is no restriction on the period of ownership after purchase;
  • There is no restriction on scrapping a car and use the allowance against a new van or vice versa;
  • Fleet and Motability customers are eligible.

Scrappage Scheme Eligibility – Old Vehicle

  • Your old vehicle must be a Car or Light Commercial Vehicle not exceeding 3.5 tonnes (N1 class);
  • It must be first registered in the UK before 31 August 1999 (T reg and earlier);
  • The Claimant keeper must have been the registered keeper for at least 12 months before the new vehicle order date;
  • The registered keeper must have a UK address;
  • The vehicle must have a current MOT certificate;
  • The vehicle must be clear of finance;
  • Dealers can’t trade in their own cars;
  • Stolen cars are not eligible;
  • Insurance write-offs are not eligible.

Scrappage Scheme Eligibility -New Vehicle

  • New Car or Light Commercial Vehicle not exceeding 3.5 tonnes;
  • UK specification vehicle;
  • First registered in the UK on or after the date of the launch of the scrappage scheme and declared new at first registration in the UK with no former keepers;
  • It must be registered to the same keeper as the registered keeper of the vehicle to be scrapped;

Ineligible New Cars

  • Used cars;
  • Ex-demonstrators;
  • Parallel or Grey imports;
  • Orders placed before the scheme starts;
  • Cars destined for resale.

How the Car Scrappage Scheme Process Works: Consumer

  • There is no need for the consumer to formally register or apply to the scheme (it’s not a voucher scheme);
  • The consumer can check in advance that their old vehicle meets the requirements of the scheme. Dealers will provide further advice;
  • Dealers will do all the paperwork and arrange for the old vehicle to be scrapped;
  • The £2,000 scrappage scheme discount must be shown on the sales invoice for the new car;
  • The consumer provides proof of identity, V5C registration document for the old car and the MOT certificate;
  • Consumer gives agreement for the old car to be scrapped ;
  • Consumer agrees to collection and use of personal data for the vehicle scrappage discount scheme;
  • Consumer agrees to be contacted by the Department of Business and Regulatory Reform (BERR) for monitoring purposes.

How the Car Scrappage Scheme Process Works: Dealer

  • The Dealer will check old vehicle eligibility and customer identity details;
  • The car manufacturer will be notified when the order is placed under the scrappage scheme and proposed trade-in vehicle details;
  • Dealer will arrange destruction of the old vehicle through an Authorised Treatment Facility after delivery of the new vehicle and will retain a copy of the Certificate of Destruction (CoD);
  • Dealer will notify the manufacturer that the transaction has been completed;
  • The Scrappage Scheme discount will be shown on the consumer’s sales invoice;
  • The following will be retained for audit purposes: V5 of trade-in, copy of CoD, current MOT and invoice showing discount.

How the Car Scrappage Scheme Process Works: Manufacturer

  • Manufacturers will have a key role in the administration of the scheme;
  • They will educate the dealer network;
  • They will promote the scheme through their own advertising;
  • They will ensure timely supply of vehicles;
  • They will submit a weekly return to the BERR listing orders under the scrappage scheme from dealers and proposed delivery dates;
  • Following the completion of a transaction, the manufacturer will submit a payment claim to the BERR (on a bi-monthly basis);
  • Following payment by BERR, the manufacturer will reimburse the dealer within 10 working days;
  • Manufacturers will notify the BERR on a daily basis when the receive notice that the scheme funding is running down.

How the Car Scrappage Scheme Process Works: BERR

  • On receipt of the order notifications from the manufacturer’s, the BERR will update payment forecasts and check the Certificates of Destruction (CoDs);
  • On receipt of a payment claim the BERR will check the details of the claim against the returns already logged;
  • The BERR will check the details of the registered keeper, CoD and MOT details on the DVLA database;
  • The BERR will issue payment to manufacturers within 10 working days of the submission of a claim and update expenditure forecasts;
  • The BERR will notify the manufacturers when funding is running down and the cut-off point;
  • An independent audit will be carried out after 2 months and at the end of the scheme;
  • The BERR will carry out scheme monitoring.

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