After ten months and four-hundred million pounds in government aid, the scrappage scheme has come to an end in the UK. Created as a way to rescue the foundering new car market, the plan gave buyers up to two thousand pounds off the purchase of a new vehicle. No plan was needed to improve used car sales. Why was it necessary? In the first quarter of 2008, new car sales were down by an astonishing 38 percent over the previous year. At that point it was clear that something had to be done or the auto industry in the UK might not survive. The scrappage scheme was the most attractive option. When it ended in March of 2010, the scheme had produced eight consecutive months of growth. The average increase was around twenty percent. So, as a temporary fix, it certainly appears as if the scrappage scheme was a genuine success. But the UK auto industry is far from safe. In fact, many industry insiders are predicting a sharp decline in sales. There are two reasons for this. The first and most obvious is that the scrappage scheme has ended. And as we now know, over fifty percent of the buyers who purchased a car under the plan said that they would not have bought a new car were it not for the discount. The second reason is that automakers have been forced to increase prices due to the weakening pound. Most car dealerships anticipate increases of up to five percent on top of the two thousand pounds that were lost when the scrappage scheme expired. As a result of these price hikes, experts are predicting a difficult 2011.
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