'Scrappage' Schemes

[john.wigley]

So now it is official! Ford have decreed that anything built before 2010 is an 'old' car. They will generously take one off your hands and give you £2000 for it if you buy a new car from them. They will then scrap it! Not resell, donate to a College. No, they will scrap it - so said Ford's MD on R4s 'Today' this morning.

To me, it reeks of 'built-in obsolescence' and is little more than a marketing ploy by the manufactures.

The older vehicle might possibly be more polluting at the point of use, but how can this possibly be considered a truly 'green' measure when one considers both the 'end of life' costs of the scrapped car and the production costs of it's replacement against a marginal improvement in emissions?

We run cars built in 1996, 1999 and 2000. As their production costs have already been amortised over many years, and their EoL costs are hopefully still some time away, I regard them as 'greener' in reality than any new car.

I have some difficulty in picturing the owner of, say, any 2009 (or earlier) Volvo rushing to their local Ford dealer for the sake of £2000!

Regards, John.

[Bill_56]

Seems like just a gimmick to me, trying to drum up new car sales to people who don't know that it is normal to negotiate discounts. Since when was it difficult to negotiate £2000 discount on a Ford?

In fact, I reason, buying a new Ford must become more expensive. Without 'scrappage' the salesman and Ford between them can factor in all that can be offered as discount, then the salesman can balance a trade in 'value' against what he thinks he can get for auction, then present the package as an offer to the customer. Now he has to factor in zero auction value, so surely the total package on offer must amount to more, just to balance the books?

[NI_Volvo_Nut]

I'd like to think the 2007 Skoda Octavia I bought in January this year for £3250 would be worth more than £2k!

[Prufrock]

Originally Posted by NI_Volvo_Nut

I'd like to think the 2007 Skoda Octavia I bought in January this year for £3250 would be worth more than £2k!

I would say that's strong money for a 2007 Skoda, and if you bought from a dealer I'd guess it values less than £2k.

Jon.

[Grimble]

Apart from it being a blatant sales gimmick dressed up as 'green', I never have and never will, buy a brand new car, no matter how much they want to discount. I suspect most owners of 'old' cars as defined by Mr Ford are similarly inclined.

Any saving is instantly eliminated as soon as you drive it away, and with the traditional high depreciation on Fords, that's a lot of cash.

3 to 4 year old vehicles for me every time, let some other mug get hit with a 60% loss on the purchase price over this period.

[Triple-S]

What an arrogant move! My nursing friend can just afford her £800 Peugeot, what with her flat rent and council tax. Yes her car is over 15 years old but there is no way she could even entertain a new car, so is in effect excluded from an scrappage benefits.
These toffee-nosed toffs are really in the dark with reality: a high proportion of car owners buy what they can afford, not new. Fact. With most, their perhaps humble but nevertheless important jobs simply don't pay as much as CEOs etc so how on earth can such a ridiculous system benefit them. Mister rep with his company Audi can well afford to replace his wife's ten-year old car in any case yet this in effect gives him money for swapping cars. Arrogant beaurocracy.

P

[DaveNP]

Definately a gimmick in my book, aimed at people with no clue about the value of a car and ways to sell them. A quick search on ebay for Ford cars from 2000 to 2009 with values over £2000 gets 4490 results, searching £2000 to £4000 to take away the specialist high priced one like restored american muscle cars and rally prepped cars still gets over 3000 results. Most of those £2000 to £4000 Fords would probably seem like a royal limo to Triple-S' nursing friend, but Ford would generously and eco-mindedly scrap them. £2000 is probably about the wiggle room that a dealer has on the list price of most new cars and I'd bet that taking advantage of the scrappage scheme means you don't get offered other deals on the new car.

[Prufrock]

Don't get too carried away with this people, take it as a marketing initiative and many others will follow. Plus if you add other dealer incentives to the scrappage offer that means between £4k and £7k discount in total - as it applies to vans too (which is a good thing). With regard to depreciation, majority have PCPs these days so depreciation isn't relevant; plus no car is immune from it.

Paul, there are many who in reality are driving around in cars they cannot afford - sub-vented rate PCPs are a big concern for many analysts.

Jon.

[Grimble]

Originally Posted by Prufrock

With regard to depreciation, majority have PCPs these days so depreciation isn't relevant; plus no car is immune from it.

Paul, there are many who in reality are driving around in cars they cannot afford - sub-vented rate PCPs are a big concern for many analysts.

Jon.

But depreciation on an older (cheaper) car is significantly less (in cash terms) than on a new one. If my car depreciated 100% in my first year of ownership, its still less in cash terms than from brand new to 12 months later.

I disagree about people driving cars they cannot afford, if they stopped payments I'm pretty sure there would be consequences.
As to whether they should be driving these cars on finance, well that's a personal choice. They are often the same group of people whinging on about the cost of living/housing and how much less they get for their money when on holiday. Priorities.
I also don't think PCP and such is in quite the same league as the sub-prime led financial crash, but it does go to show that lessons still have not been fully absorbed by the financial industry.

[Prufrock]

I cannot disagree with your first point, long term ownership is the solution to depreciation - whether you buy new or used.

Amortise the £13000 my Wife's Dad paid for his near new 745 (that we still have) in 1986 - what it is worth in 2017 after 31 years is no longer relevant.

The point about people driving cars they cannot afford is valid, if PCP schemes did not exist then there would be far fewer cars cold new in the UK - you could say I am partially responsible as I have been involved with the development of PCP schemes - developing them in partnership with both NSCs* (manufacturers) and their joint venture finance houses (now referred to as captives).

I've published articles, and speak on the subject - I am a fan but consider they are being oversold/miss-sold.

Jon.

*National Sales Companies.