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To sell or to scrap?

Confidential gets some expert advice on the big question for owners of older cars – take the £2,000 government scrappage money, or sell it yourself?

Published on June 12th 2009.

To sell or to scrap?

The car scrappage incentive scheme was announced in the 2009 Budget, primarily as a way of boosting sales for the struggling car industry. But it also gives owners of older cars the chance to upgrade to a swish new motor by giving them £2,000 toward the cost, with £1,000 coming from the government and £1,000 coming from the car manufacturer.

But is it better to sell your old car rather than scrap it? Who is eligible for the scheme? And how much is a new car going to cost you? David Hobin, managing director of car dealership Hobin of Manchester, explains all.

Who can use the scheme?
“People who've got a car that's over 10-years-old. You've got to have been the owner for at least the last 12 months, and the car's got to have a current MOT and road tax. That's to stop people going out and buying a 10-year-old car for £50 and then taking it to a dealer. You've got to be the bona fide owner of that car.”

What are the benefits of using the scrappage scheme?
“There is no way the customer would get £2,000 for a 10-year-old car unless it was a vintage model. And invariably a car of that age is going to be high on emissions, so it's going to be a polluting vehicle. Modern cars are very strict on emissions, so you're changing a polluting vehicle for one that's low on emissions – and usually more efficient. It'll do more miles to the gallon, so you'll get a better return every time you put fuel in the car.”

Do new cars tend to be safer as well?
“Yes. Modern cars are fitted with driver and passenger air bags as standard. It's mandatory when you're building a car nowadays.”

“And if you've got a 10-year-old car, you might be spending £500 per annum on keeping it going. All new cars come with at least a three year warranty, so you're not paying anything other than standard servicing for three years.”

Can you only get the £2,000 discount on brand new cars?
“Yes. You can't use it on a nearly new car, which is unfortunate. The incentive scheme in Germany is for cars of up to 12-months-old. If it had been like that in the UK, it'd have been better. Our government has only provided £300m, which only works out at 150,000 cars.

But to be fair, it's given our industry a shot in the arm, which we've needed because we've been suffering for 12 months now.”

Have you noticed an increase in business?
“We've definitely sold more cars. It's generated much-needed extra sales for us. The trouble is though, the money's going to run out because orders will soon get taken for those 150,000 cars. And once the money's run out, that's it.”

Which new cars are people buying after they've scrapped their old one?
“I sell SEAT and Skoda and the majority of customers are going for the Skoda Fabia or the SEAT Ibiza. These are small cars, very economical to run, with low emissions. And they're in the right price range, because somebody who's got a 10-year-old car has got a 10-year-old car for a reason. Typically a car that I've just mentioned would cost about £9,000 before you take off your £2,000 contribution from the scrappage scheme.”

Can you give an example of how much you'd pay a month for a new SEAT or Skoda if you got a finance deal?
“A SEAT 5-door Ibiza would normally cost you £9,500. Once you've taken your government contribution of £2,000 and put a £500 deposit in, you can have that car for typically £135 a month.”

The car scrappage scheme runs until 28 February 2010 but it is likely to end sooner because the £300m government money will run out. If you're interested and would like to discuss your options with David or one of his team at Hobin of Manchester, call them on 0161 708 9000, or visit their showroom at 266 Bury New Road, Manchester.

Click here for more information.

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