Scrappage Scheme is extended by a month

The Scrappage Scheme has been extended until the end of March, giving motorists an extra month to take advantage of a £2,000 discount off a new car.

The move means that new registration plate cars can be purchased through the scheme as the new ‘60’ plate becomes available from March 1.

The scheme has a limited fund, however and although the deadline is now set for March 31, the scheme would close sooner if the final fund runs out. In order to establish an ‘orderly wind-down’ of the scheme, the Government will apportion the final available orders through the scheme, distributing a quota to each participating carmaker. The allowances are based on the carmaker’s success through the scheme, the more sales they have made through the scheme so far, the larger their share of the final pot will be. Carmakers such as Hyundai and Ford have been particularly successful through the scheme.

The Government has yet to issue the final quotas, but is expected to write formally to the carmakers to inform them of the closing plans.

By 24th January 330,722 new vehicle orders were taken under the Scrappage Scheme since it was introduced in May 2009. The scheme allows people with a car registered on or before 29 Feb 2000 (V registration) to scrap it in exchange for a £2,000 discount off a new vehicle. £1,000 is supplied by the manufacturer and the other grand comes from the Government fund. Small vans aged eight years or older are also eligible to take part under the scheme.

Announcing the extension to the scheme, business secretary Lord Mandelson said: “Against the background of the economic downturn the Scrappage Scheme has proved a great success, driving UK car sales, protecting jobs and supporting the supply chain for car manufacture at a time when this sector needed it most.

“If you’re considering buying a new car, you should place your order as soon as possible to avoid disappointment, because the budget is strictly limited.” 

The decision to extend means that February and March could be the best time for many to buy a new car as April will see the introduction of so-called Showroom Taxes just as the Scrappage discount withdraws. The new tax will mean that motorists may have to pay a higher, first year rate of VED on their new car, depending on the emission levels of their new car. Any cars which emit over 166g/km of CO2 will pay additional road tax, increasing their on-the-road price.

Author: Faye Sunderland, February 4th, 2010
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