Any motorist failing to do so will need to provide evidence that they lived in both addresses, or else run the risk of being denied the total £2,000 subsidy. Last year a police study found that around three percent of cars on the road were registered to the wrong address.

And now uSwitch, a price comparison website, has found that those people who do participate in the scheme will find the benefit of the subsidy wiped out within 88 days due to the rapid rate of depreciation on new vehicles. New cars will on average drop in value by some 49 percent in their first year.

Furthermore, motorists should brace themselves for a hike in the cost of their insurance policy due to the increased value of their new car versus their old vehicle.

The industry however still had high hopes that the Car Scrappage Scheme will kick start demand for cars in Britain, much as it has done in Germany following the introduction of a similar scheme earlier this year.

The Society of Motor Manufacturers and Traders have reported a sharp rise in potential buyers, whilst Sue Robinson, Director of the Retail Motor Industry Federation said that dealers had reported a “marked increase in enquiries since the scheme was announced in the Budget in April.”

Car Scrappage Panic

Car buyers planning on purchasing new cars through the Government’s Car Scrappage Scheme may find they’re unable to drive-off the forecourts when the scheme goes live on Monday 18th May, due to a VAT row between manufacturers and the Government.

Manufacturing bosses are claiming the Car Scrappage Scheme has plunged into chaos due to a Government error with the scheme’s details. Motor industry leaders are saying this weekend that some manufacturers may delay joining the scheme having failed to reach agreement with the Government. The dispute is apparently affecting all 39 carmakers who are signed up to the scheme.

The cost of the Car Scrappage Scheme is being split between the Government and the motor industry, however the Society of Motor Manufacturers and Traders said: “The dispute probably means some manufacturers will not be able to deliver vehicles to customers on Monday. We are seeking clarification about the VAT split between manufacturers and dealers, and how it is administered.”

The Department for Business insisted that manufacturers who had signed up to the scheme were made very clear of the terms and conditions.

The very latest Car Scrappage Scheme Survey is revealing over 50% of those surveyed and interested in the scheme are serious buyers.

Nearly 75% of those surveyed are looking to trade in their old motor for a new £10,000 or below model. It would appear dealerships offering attractive deals on the fuel efficient lower end market stand to increase sales.

However, it appears that the scrappage scheme is not just limited to the cost effective end of the market. Just over 23% of potential consumers are considering utilising the scheme to fund the purchase of vehicles in £10k – £20k range -the larger engine higher specification models.

The UK consumer is evidently working the numbers to their advantage. And why not say the Car Scrappage Scheme as they have little to lose in purchasing a new car through the scheme. But cynicism has recently arose from various quarters of the media claiming that some UK dealerships are including previous sale discounts as part of their portion of the scheme’s £2,000 subsidy. Therefore, the price of showroom models are only being reduced by a further £1,000 – as provided by the Government. However, UK consumers are savvy folk and will use all their social networks and resources to compare prices across dealerships. We would say – ‘Do plenty of research before jumping in’.

The Car Scrappage Scheme begins on Monday 18th 2009 and we anticipate an increase in internet and showroom enquiries.

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The Department of Business Enterprise and Regulatory Reform (BERR) stated that cars will be dealt with as ordinary end-of-life vehicles through the manufacturers. The BERR also confirmed that the scheme’s main objective was to boost the car industry’s production and sales and therefore the scrappage industry together with the environmental benefits were of secondary importance.

Ian Hetherington Director General of the British Metal Recycling Association is of the opinion that the Government have failed to address their concerns that only 30 per cent of all Approved Treatment Facilities (AFTs) are being made accessible through the “end of life vehicle” regulations. Furthermore, the UK scrap industry is of the opinion that the Government has failed to clarify details of the car scrappage scheme including the scrappage and collection rules. The scheme begins on 18 May 2009 with the UK consumer also unclear as to the final details.

Ford forecasts that it will gain 20% of the car scrappage scheme market. The manufacturer has 130 ATFs and 20 collection points across the UK, which they believe is sufficient in accommodating the increased scrap volume once the scheme commences next week.

Cartakeback.com are the dismantling contractor to Ford and Manager Graham Price stated that car manufacturers are using their own contracted ATFs as these providers guarantee the 85% recycling compliance rate. Car manufacturers have the facility to ensure that this 85% recycling rate is being achieved by only nominating specific ATFs. A good percentage of the Government ATFs are yet to report their target achievements to the BERR, thereby making themselves less attractive to car manufacturers.

Parker’s surveyed 600 visitors to their web site and found that c.70% said the the Government’s contribution to the car scrappage scheme was insufficient. Furthermore, 81% stated they would not be taking part in the scheme.

Based on the Car Scrappage Team’s own survey data, it would appear the poor reception from the consumer only relates to the Government’s small contribution, rather than the car deals being offered by UK dealers. Moreover, dealers are acting fast with numerous car deals.

From what can be currently gleaned from this evolving market, the car scrappage scheme is becoming a 10 month sale with pro-active dealers offering new or nearly new models, offered through their own discounts under the “Car Scrappage Scheme” banner. Therefore, the level of subsidy being provided by the Government may be becoming just an extra bonus saving, which dealers can add to the deal.

Gareth Thomas, the Consumer Affairs Minister  said “I don’t think this will be a flop. But you’re right to say there are good deals in the market already.”, i.e. under the “Car Scrappage Scheme” banner.

This may be a win-win situation for UK consumers searching for a new car deal, as they’re being offered attractive dealer discounts together with the £1,000 Government subsidy.

The great British public can smell a deal from miles away and the car scrappage scheme appears to be just the ticket for our troubled UK consumer. Over 70% of those surveyed intend on scrapping their out-dated run-around for a contemporary economical model. Some manufacturers and dealers will be licking their lips when their mince pies clock this news, as showrooms displaying the very latest lower market models could do very nicely. And don’t be surprised if a few goodies are thrown in as part of any deal.

So when you look out your window this summer, don’t be surprised if you see a new sleek and shiny economy model on the neighbour’s drive. And if you do,  ask yourself why you didn’t take advantage of the car scrappage scheme?

Well, it wouldn’t be too late would it?!

Hyundai is reporting that enquiries are up 400% at its dealerships since the scheme was announced, whilst Ford say that its car scrappage scheme section went live on its website, as many visits were received as to its most popular page within just a few days.

Similarly, Toyota are reporting ‘major increases in traffic’ to its website, Audi have noted significant interest in the scrappage scheme area of its website and Peugeot dealers are getting 60 to 80 more enquiries as well as a ‘massive increase’ in website traffic since the scheme was announced.

Nissan are seeing more visits to its dealerships since the Budget announcement although many of the visitors we trying to find the cheapest car possible. If this is the trend through the industry, it points towards the likelihood that stimulus will not be to the whole of the industry, but rather skewed towards the cheaper end of the market.

It is widely expected that May 18 is the date from which the scheme will commence, with an official announcement expected imminently.