The Government launched the Car Scrappage Scheme in April 2009, with deliveries beginning on the 18th May following, in a bid to stimulate flagging sales in the car industry and encourage people to replace older cars with safer, more environmentally-friendly models. It closely resembled schemes from Germany, France and Italy that had been set up with similar aims. The scheme closed in March 2010, after extensions in September 2009 and February 2010, when the funds allocated to it were eventually exhausted.
The scheme allowed owners of cars more than ten years old to claim a £2000 reduction in the price of a new car in return for scrapping their old vehicle. It was funded as a joint initiative between the Government and vehicle manufacturers, with each paying a £1000 contribution to the price reduction. In total, the Government provided around £400 million for the scheme and forty-one vehicle manufacturers signed up, ranging from Vauxhall to Bentley. However, to qualify for the scheme, vehicles had to: weigh 3.5 tonnes or under; be registered in the UK on or before 29 February 2000; be taxed, tested and MOTed when the new vehicle was ordered; and have been in the owner’s possession for at least 12 months.
Despite these restrictions, 35,000 cars were scrapped through the scheme in May 2009 alone. It has been regarded as a success by some, since cars bought through it had average CO2 emissions of 133g/km (27 percent lower than the average CO2 of scrapped cars) and around a fifth of new car registrations since May 2009 came through the Scrappage Scheme. However, many consumer groups argued the scheme covered up price increases by manufacturers and the Institute for Fiscal Studies criticised it since many of the vehicles were not produced in Britain.
The end of the scheme brought fears that sales would once again fall in the car industry and, although this was true to an extent, manufacturers have responded with a range of measures to promote sales, including lifetime warranties and new ‘Swappage Schemes’.