£2,000 scrap handout for car buyers 'gone in 88 days'

Published on Thursday 14 May 2009 22:04

THE £2,000 incentive under the government's "cash for bangers" car-scrappage scheme will be wiped out in just 88 days due to depreciation, it has been claimed.

From Monday, owners of cars ten years old or more will get 2,000 if they trade in their old model and buy a new one.

But according to price comparison company uSwitch.com, vehicle depreciation is set to be the "thorn in the side" of the scrappage scheme.

The company said, on average, the initial 2,000 incentive is wiped out in depreciation in just 88 days of owning the new car.

Purchasing one of the top ten most popular new cars costs 16,232 on average and this value plummets by 49 per cent in the first year alone.

Mark Monteiro, of the company, said: "The government's car-scrappage scheme has been introduced to give the ailing motor industry a much-needed shot in the arm by enticing motorists to participate with a 2,000 incentive.

"However, while this is a positive bonus for consumers, it seems even this payout can't hold its weight against depreciation, which dents the value of a car from the moment you drive off the forecourt."

AA president Edmund King said: "The scrappage scheme will benefit hundreds of thousands of consumers. This analysis is irrelevant and misleading. If you are only going to keep a car for 88 days it is not worth buying one.

"Most consumers taking advantage of the scrappage scheme will have had their old cars for many years and therefore are likely to hold on to their new car for at least three years."