Chester Car Dealers may be hoping to see sales of new cars soar under the new scrappage scheme set up by Gordon Brown.
Currently Gordon Brown’s ‘new car’ scheme is being hailed a great success but will Chester car dealers see the same result?
The scheme invites those (including me!) with cars that are ten years old or more to go out and buy a brand new car with £2000 off the recommended retail price in return for scrapping the old model.
It is claimed that over 35,000 people, one in five of all new car buyers, have taken advantage of the scrappage scheme already and we are warned by Peter Mandelson, the Government’s Business Secretary that:
“it is time-limited, it’s first come first served. So if they don’t want to be disappointed, get your orders in soonâ€
It is the intention of the government to solve many of the economic problems faced by the car industry with the incentive however there are concerns that new car dealers in Chester and across the rest of the UK may end up losing out.
Of the 35,000 cars already purchased only £1000 of the each £2000 award comes from the Government the rest must be provided to the customer by the car retailer themselves. Many car retailers have expressed that on the smaller cars prices have already been reduced to the extent that handing over this £1000 results in them turning a negative profit.
Over a long period of time this ‘bangers for cash’ system could be detrimental to Chester car dealers and to those wishing to purchase a new used car.
Many Chester car retailers have previously already offered a fair amount off the retail price if you leave your old car with them. This was true of brand new car purchases but more importantly when buying a used car. So what will happen to used car dealers in Chester and the rest of the UK?
For many (and I will dare to say most) owners of vehicles over ten years old are fairly unlikely to purchase a brand new car unless their financial circumstances have dramatically changed for the good. Even then if you have owned a reliable ‘old’ car would you really splash the cash on a new model only to have it depreciate in value the minute you drive it off the forecourt?
Personally when my twelve year old car finally gives up the ghost it would be a used car I would choose. Does this scheme mean that I will get less in return for my trade-in and therefore pay more for a used car than I would have done had the ‘bangers for cash’ scheme not been introduced?
So will it be the great success that the Government expects?
Sadly with results issued yesterday – 4th June 2009 – this appears not to be the case.
It could be said that intention for Chester car drivers and those around the country to become more environmentally friendly has been a success as over two-thirds of cars bought under the car scrappage scheme have been with small engines of 1.3 litres or less as discussed in the Telegraph.
However the primary aim the ‘bangers for cash’ scheme was to boost the financial demise of the UK car industry.
As discussed by BBC News UK sales of new cars fell 24.8% in May as compared with the same month last year and with this being the thirteenth month in a row that the industry has seen a decline it seems that the UK public do not see £2000 off a top price vehicle enough of an incentive.
So will you be taking a visit to your Chester car dealer?