Scrappage program
Encyclopedia
A scrappage program is a government budget program to promote the replacement of old vehicles with modern vehicles. Scrappage programs generally have the dual aim of stimulating the automobile industry and removing inefficient, high emissions vehicles from the road. Many European countries have introduced large-scale scrappage programs as an economic stimulus to increase market demand in the industrial sector during the global recession that began in 2008.
Scrappage programs were touted with different names, mostly referring to an environmental benefit. The Vehicle Efficiency Incentive
in Canada was based on fuel-efficiency of cars. In Germany
the economic stimulus program was called "Umweltprämie" (environmental premium) and in Austria
"Ökoprämie" (eco-premium) while most of the public referred to it simply as "Abwrackprämie" (scrappage premium). Other countries have not tried to connect the program title with an environment aspect - still the Italian "Incentivi alla rottamazione" (scrappage incentives) and French "Prime à la casse" (scrappage premium) require the new car to meet modern emission standards. The German scrappage incentive scheme and the British scrappage scheme do not have such requirements, and the UK scheme was openly sketched on the target to provide financial support to the motor industry. Similarly, the United States Congress
devised a scrappage scheme, commonly referred to as "cash for clunkers
," as part of a general Automotive Stimulus package series; however, the voucher is only given when the newer car has a better fuel efficiency than the old car.
In the 1990s, many countries had introduced tax rebate programs for new cars that meet a modern emission standard, but, with the Kyoto Protocol
, some countries made the public offer dependent on the scrappage of old cars.
Other programs with the same goal of stimulating industry and increasing efficiency include the Cash for Caulkers plan to promote replacing old refrigerators, air conditioners, etc. with newer, more efficient appliances.
. There is a limit of 30,000 cars up to December 2009.
program, administered by the Government of Canada
, allows residents of Canada to trade in a vehicle
made in 1995 or earlier for a wide range of rewards, such as a public transit pass or C$
300.
Eligible vehicles include used minivans, small and mid-size trucks and other mid-size passenger cars that no longer meet the government emissions standards. In addition, the Shanghai
local government is offering similar incentives of $450 to $1,100 per vehicle to its residents who trade in older vehicles, allowing the total subsidy to be as much as $2,000.
After meeting with little success in the first few months, the government raised the compensation to 5,000-18,000 Yuan, or about 732-2,632 US dollars, for each qualified vehicle at the end of 2009. In June 2010, it was announced that the program would be extended until the end of 2010.
was introduced on January 19, 2009 - the old car would need to be older than 10 years and the new car would need to be meet a particular CO2 emission standard of - it starts with €1000 for a car with less than 160 g/km. This is added up for even better emission standards (€5000 for cars with less than 60 g/km - effectively one electric vehicles) and a "super-bonus" for the scrappage of the old car.
French car manufacturers are availing of this scheme for new car purchases in Ireland as well, so Irish cusomters that purchase new French cars can avail of a grant from both the French Government and the Irish Government.
has been the largest so far. Every owner of a car being older than 9 years was entitled for a scrappage premium of €2,500 ($3,320) when buying a new car. When introduced on 13 January 2009, the program was limited to at most 600,000 cars and a budget of €1.5b. However the car market boomed with an unexpected increase of 40% (March 2009 compared to March 2008) in sales making the program too short running to offer more than a short termed stimulus - estimates showed that the program fund would be used up by May. On March 25, 2009, the government decided to continue the scrappage scheme at least until the end of year. A German think tank estimated that the net impact of the program on the German budget will be €2.5b ($3.5b).
The impact on automakers has been varied. Ford has benefited from high sales of the Ka
, Fiesta
, and Fusion--together up 56% in April 2009 from a year before. However, luxury automakers like BMW
, Mercedes-Benz
, and Porsche
have had little benefit from the program and may have customers who have opted for cheaper, smaller cars.
German authorities discovered an illegal scheme through which an estimated 50,000 scrapped vehicles have been exported to Africa and Eastern Europe. In contrast with the U.S. Cash for Clunkers Program
which requires dealers to destroy old engines by draining the motor oil
and injecting instead sodium silicate
, the German program only required the scrapped vehicles to be sent to junkyards, thus allowing the illegal exports.
there was scrappage scheme from January 1, 2007, to December 31, 2008, that allowed for €700 plus a tax rebate. A new scrappage scheme is in place in 2009: new cars must comply at minimum with Euro 4 + emit a maximum of 130 g/km (diesel) or 140 g/km (other fuels) of CO2.
Scrapping incentive for cars is €1,500 but can be combined with purchase incentive of €1,500 for a new car running on CNG, electricity or hydrogen (increased to €3,000 if it emits exactly 120 g/km and to €3,500 if it emits less than 120 g/km) The purchase incentive for new car running on LPG is €1,500, increased to €2,000 if the car emits less than 120 g/km. This can also be combined with the scrapping incentive. Scrappage program ended in December 2009 with delivery of vehicle by March 2010.
have introduced the scrappage scheme for a second time on December 10, 2009 which offers €1,500 for cars 10 years or older. The discount is on the Vehicle Registration Tax and can only be used on cars that have emissions that do not exceed 140g/km. In 2010 the scheme value was reduced to €1,250 per scrapped car and the end date for the scheme was set for 30th June, 2011. The first scheme ran in the early 1990s.
introduced a program from April 1, 2009 until March 31, 2010 (or until the budget is exhausted), offering up to 250,000 yen (~US$2,500) to trade in vehicles 13 years old or more for new environmentally friendly
fuel-efficient cars, according to environmental performance criteria established by the government. The purchasing rebate is 125,000 yen (~US$1,250) if trading for a mini or kei car
, which already get preferential tax treatment, built to specifications defined by law in Japan that place limits on size engine displacement and power. The Japanese government also included a tax break on gasoline-electric hybrid vehicles and other low emission cars and trucks, allocating $3.7 billion for the program.
a scrappage scheme was introduced in January 2009 that allows for a premium if the old car was older than 10 years and the new car to meet CO2 < 150 g/km (1,500 euros) or CO2 < 120 g/km (2,500 euros).
provides an additional premium of between €250 and €1,000.
a "Vehicle Scrap Deposit Tax" for all motor vehicles was introduced in 1978. When purchasing or registering a new vehicle, a standard €190 tax (as per 2010) is paid to the Norwegian Customs and Excise Authorities. This tax is refunded when scrapping the vehicle.
has increased a scrappage scheme allowing €1,000 for a car being older than 10 years and €1,500 for a car being older 15 years if the car is being recycled and the new car has an emission standard of CO2 < 140 g/km.
In January 2010, Portuguese Government made law proposal to limit CO2 emissions of the new car to 130 g/km. This proposal will be voted in the beginning of March.
a scrappage scheme was introduced in 2005 and it allows customers for 3.800 lei (1 euro = 4,2 lei) if the car was older than 10 years. There is no emission restriction of the new car to be bought. Since 2010, one person can scrap up to three cars and/or use the same amount of vouchers in exchange for a new one.
Number of cars traded
a scrappage scheme was introduced that allows for €2,000 (originally €2,500) if the old car was older than 10 years and the new car was below €25,000.
there is a scrappage scheme (Plan 2000E) with a special credit scheme for a new car (category M vehicle
) to reach a level of less than 120 g/km and trucks (category M vehicle
) 160 g/km and if the old vehicle was more 10 years or 250,000 km.
in the 2009 budget
. Scrapping of an old car (registered on or before 31 July 1999) would allow for a £2,000 cash incentive - the money burden is shared with £1,000 funded by the government and £1,000 funded by the automobile industry. The program is limited to £300 million allowing for about 300,000 customers to benefit. Many dealers taking part in the scheme were offering more than the recommended £1,000, many as high as £2,000 or even £3,000.
The UK scheme was intended to provide financial support to the motor industry. It is largely assumed that newer cars include a benefit for the environment, however Economist Willem Buiter
questions environmental benefits of the program.
On 28 September 2009, it was confirmed that a further investment from the government was to be introduced extending the scheme further. It would now cover cars registered as late as 29 February 2000.
123 Internet Designs, one of the companies behind the development of the web based system used by Autogreen has now introduced electronic Environmental Waste notices which will be used during the collection and delivery process of the vehicles managed under the scheme.
The scheme closed on 31 March 2010.
Competitively priced cars from traditional "budget" brands sold particularly well in the United Kingdom while the scrappage scheme was in force. These included the Hyundai i10
and Kia Picanto
.
The Car Allowance Rebate System (CARS) was a $3 billion US federal
program that helps US citizens to purchase a new, more fuel efficient vehicle when trading in a less fuel efficient vehicle. The program officially started on July 1, 2009 and claims began to be processed until July 24, and ended on August 24, 2009, as the appropriated resources were exhausted.
The initial $1 billion appropriated for the system was exhausted by July 30, 2009, well before the anticipated end date of November 1, 2009, due to very high demand. In response, Congress approved an additional $2 billion for the program.
On August 26 the DoT reported that the program resulted in 690,114 dealer transactions submitted requesting a total of $2.877 billion in rebates. At the end of the program Toyota accounted for 19.4 % of sales, followed by General Motors
with 17.6 %, Ford
with 14.4 %, Honda
with 13.0 %, and Nissan with 8.7%. The Toyota Corolla
ranked as the program's top seller and the Ford Explorer
4WD
was the top trade-in.
The Department of Transportation also reported that the average fuel efficiency
of trade-ins was 15.8 mpg, compared to 24.9 mpg for the new cars purchased to replace them, translating to a 58% fuel efficiency improvement. However, a study by researchers at the University of Michigan
evaluated the effects of the program on the average fuel economy considering a baseline without the existence of the program, since there was already a trend for buying vehicles with higher fuel economy due to the high gasoline prices of 2007 and 2008, and the economic crisis of 2008. The study found that the program improved the average fuel economy of all vehicles purchased by 0.6 mpg in July 2009 and by 0.7 mpg in August 2009
Scrappage programs were touted with different names, mostly referring to an environmental benefit. The Vehicle Efficiency Incentive
Vehicle Efficiency Initiative
The Vehicle Efficiency Incentive was introduced in the 2007 Canadian federal government budget, aimed at promoting fuel efficient vehicles...
in Canada was based on fuel-efficiency of cars. In Germany
Germany
Germany , officially the Federal Republic of Germany , is a federal parliamentary republic in Europe. The country consists of 16 states while the capital and largest city is Berlin. Germany covers an area of 357,021 km2 and has a largely temperate seasonal climate...
the economic stimulus program was called "Umweltprämie" (environmental premium) and in Austria
Austria
Austria , officially the Republic of Austria , is a landlocked country of roughly 8.4 million people in Central Europe. It is bordered by the Czech Republic and Germany to the north, Slovakia and Hungary to the east, Slovenia and Italy to the south, and Switzerland and Liechtenstein to the...
"Ökoprämie" (eco-premium) while most of the public referred to it simply as "Abwrackprämie" (scrappage premium). Other countries have not tried to connect the program title with an environment aspect - still the Italian "Incentivi alla rottamazione" (scrappage incentives) and French "Prime à la casse" (scrappage premium) require the new car to meet modern emission standards. The German scrappage incentive scheme and the British scrappage scheme do not have such requirements, and the UK scheme was openly sketched on the target to provide financial support to the motor industry. Similarly, the United States Congress
United States Congress
The United States Congress is the bicameral legislature of the federal government of the United States, consisting of the Senate and the House of Representatives. The Congress meets in the United States Capitol in Washington, D.C....
devised a scrappage scheme, commonly referred to as "cash for clunkers
Car Allowance Rebate System
The Car Allowance Rebate System , colloquially known as "Cash for Clunkers", was a $3 billion U.S. federal scrappage program intended to provide economic incentives to U.S. residents to purchase a new, more fuel-efficient vehicle when trading in a less fuel-efficient vehicle...
," as part of a general Automotive Stimulus package series; however, the voucher is only given when the newer car has a better fuel efficiency than the old car.
In the 1990s, many countries had introduced tax rebate programs for new cars that meet a modern emission standard, but, with the Kyoto Protocol
Kyoto Protocol
The Kyoto Protocol is a protocol to the United Nations Framework Convention on Climate Change , aimed at fighting global warming...
, some countries made the public offer dependent on the scrappage of old cars.
Other programs with the same goal of stimulating industry and increasing efficiency include the Cash for Caulkers plan to promote replacing old refrigerators, air conditioners, etc. with newer, more efficient appliances.
Austria
The scrappage scheme in Austria was introduced on April 1, 2009, and it allows customers for €1,500 cash if the car was older than 13 years and the new car would meet the Euro-4 emission criteriaEuropean emission standards
European emission standards define the acceptable limits for exhaust emissions of new vehicles sold in EU member states. The emission standards are defined in a series of European Union directives staging the progressive introduction of increasingly stringent standards.Currently, emissions of...
. There is a limit of 30,000 cars up to December 2009.
Canada
The Retire Your RideRetire Your Ride
The Retire Your Ride program is a voluntary Canadian scrappage program created to reward Canadians for permanently retiring in a vehicle made in 1995 or earlier for a wide range of rewards, such as a public transit pass or C$300. The program ended on March 31, 2011...
program, administered by the Government of Canada
Government of Canada
The Government of Canada, formally Her Majesty's Government, is the system whereby the federation of Canada is administered by a common authority; in Canadian English, the term can mean either the collective set of institutions or specifically the Queen-in-Council...
, allows residents of Canada to trade in a vehicle
Vehicle
A vehicle is a device that is designed or used to transport people or cargo. Most often vehicles are manufactured, such as bicycles, cars, motorcycles, trains, ships, boats, and aircraft....
made in 1995 or earlier for a wide range of rewards, such as a public transit pass or C$
Canadian dollar
The Canadian dollar is the currency of Canada. As of 2007, the Canadian dollar is the 7th most traded currency in the world. It is abbreviated with the dollar sign $, or C$ to distinguish it from other dollar-denominated currencies...
300.
China
In June 2009 a nationwide scrappage program was implemented offering rebates of $450 to $900 for trading in old heavy polluting cars and trucks for new ones, the program runs until May, 31 2010. The program is expected to substitute 2.7 million high polluters from the national car fleet.Eligible vehicles include used minivans, small and mid-size trucks and other mid-size passenger cars that no longer meet the government emissions standards. In addition, the Shanghai
Shanghai
Shanghai is the largest city by population in China and the largest city proper in the world. It is one of the four province-level municipalities in the People's Republic of China, with a total population of over 23 million as of 2010...
local government is offering similar incentives of $450 to $1,100 per vehicle to its residents who trade in older vehicles, allowing the total subsidy to be as much as $2,000.
After meeting with little success in the first few months, the government raised the compensation to 5,000-18,000 Yuan, or about 732-2,632 US dollars, for each qualified vehicle at the end of 2009. In June 2010, it was announced that the program would be extended until the end of 2010.
France
The scrappage scheme of FranceFrance
The French Republic , The French Republic , The French Republic , (commonly known as France , is a unitary semi-presidential republic in Western Europe with several overseas territories and islands located on other continents and in the Indian, Pacific, and Atlantic oceans. Metropolitan France...
was introduced on January 19, 2009 - the old car would need to be older than 10 years and the new car would need to be meet a particular CO2 emission standard of - it starts with €1000 for a car with less than 160 g/km. This is added up for even better emission standards (€5000 for cars with less than 60 g/km - effectively one electric vehicles) and a "super-bonus" for the scrappage of the old car.
French car manufacturers are availing of this scheme for new car purchases in Ireland as well, so Irish cusomters that purchase new French cars can avail of a grant from both the French Government and the Irish Government.
Germany
The scrappage scheme of GermanyGermany
Germany , officially the Federal Republic of Germany , is a federal parliamentary republic in Europe. The country consists of 16 states while the capital and largest city is Berlin. Germany covers an area of 357,021 km2 and has a largely temperate seasonal climate...
has been the largest so far. Every owner of a car being older than 9 years was entitled for a scrappage premium of €2,500 ($3,320) when buying a new car. When introduced on 13 January 2009, the program was limited to at most 600,000 cars and a budget of €1.5b. However the car market boomed with an unexpected increase of 40% (March 2009 compared to March 2008) in sales making the program too short running to offer more than a short termed stimulus - estimates showed that the program fund would be used up by May. On March 25, 2009, the government decided to continue the scrappage scheme at least until the end of year. A German think tank estimated that the net impact of the program on the German budget will be €2.5b ($3.5b).
The impact on automakers has been varied. Ford has benefited from high sales of the Ka
Ford Ka
The Ford Ka is a city car from the Ford Motor Company marketed in Europe and elsewhere.The current European version is produced by Fiat Auto in Tychy, Poland, while the model sold in Latin America is built in Brazil and Argentina....
, Fiesta
Ford Fiesta
The Ford Fiesta is a front wheel drive supermini/subcompact manufactured and marketed by Ford Motor Company and built in Europe, Brazil, Argentina, Mexico, Venezuela, China, India, Thailand and South Africa...
, and Fusion--together up 56% in April 2009 from a year before. However, luxury automakers like BMW
BMW
Bayerische Motoren Werke AG is a German automobile, motorcycle and engine manufacturing company founded in 1916. It also owns and produces the Mini marque, and is the parent company of Rolls-Royce Motor Cars. BMW produces motorcycles under BMW Motorrad and Husqvarna brands...
, Mercedes-Benz
Mercedes-Benz
Mercedes-Benz is a German manufacturer of automobiles, buses, coaches, and trucks. Mercedes-Benz is a division of its parent company, Daimler AG...
, and Porsche
Porsche
Porsche Automobil Holding SE, usually shortened to Porsche SE a Societas Europaea or European Public Company, is a German based holding company with investments in the automotive industry....
have had little benefit from the program and may have customers who have opted for cheaper, smaller cars.
German authorities discovered an illegal scheme through which an estimated 50,000 scrapped vehicles have been exported to Africa and Eastern Europe. In contrast with the U.S. Cash for Clunkers Program
Car Allowance Rebate System
The Car Allowance Rebate System , colloquially known as "Cash for Clunkers", was a $3 billion U.S. federal scrappage program intended to provide economic incentives to U.S. residents to purchase a new, more fuel-efficient vehicle when trading in a less fuel-efficient vehicle...
which requires dealers to destroy old engines by draining the motor oil
Motor oil
Motor oil or engine oil is an oil used for lubrication of various internal combustion engines. The main function is to lubricate moving parts; it also cleans, inhibits corrosion, improves sealing, and cools the engine by carrying heat away from moving parts.Motor oils are derived from...
and injecting instead sodium silicate
Sodium silicate
Sodium silicate is the common name for a compound sodium metasilicate, Na2SiO3, also known as water glass or liquid glass. It is available in aqueous solution and in solid form and is used in cements, passive fire protection, refractories, textile and lumber processing, and automobiles...
, the German program only required the scrapped vehicles to be sent to junkyards, thus allowing the illegal exports.
Italy
In ItalyItaly
Italy , officially the Italian Republic languages]] under the European Charter for Regional or Minority Languages. In each of these, Italy's official name is as follows:;;;;;;;;), is a unitary parliamentary republic in South-Central Europe. To the north it borders France, Switzerland, Austria and...
there was scrappage scheme from January 1, 2007, to December 31, 2008, that allowed for €700 plus a tax rebate. A new scrappage scheme is in place in 2009: new cars must comply at minimum with Euro 4 + emit a maximum of 130 g/km (diesel) or 140 g/km (other fuels) of CO2.
Scrapping incentive for cars is €1,500 but can be combined with purchase incentive of €1,500 for a new car running on CNG, electricity or hydrogen (increased to €3,000 if it emits exactly 120 g/km and to €3,500 if it emits less than 120 g/km) The purchase incentive for new car running on LPG is €1,500, increased to €2,000 if the car emits less than 120 g/km. This can also be combined with the scrapping incentive. Scrappage program ended in December 2009 with delivery of vehicle by March 2010.
Ireland
IrelandRepublic of Ireland
Ireland , described as the Republic of Ireland , is a sovereign state in Europe occupying approximately five-sixths of the island of the same name. Its capital is Dublin. Ireland, which had a population of 4.58 million in 2011, is a constitutional republic governed as a parliamentary democracy,...
have introduced the scrappage scheme for a second time on December 10, 2009 which offers €1,500 for cars 10 years or older. The discount is on the Vehicle Registration Tax and can only be used on cars that have emissions that do not exceed 140g/km. In 2010 the scheme value was reduced to €1,250 per scrapped car and the end date for the scheme was set for 30th June, 2011. The first scheme ran in the early 1990s.
Japan
JapanJapan
Japan is an island nation in East Asia. Located in the Pacific Ocean, it lies to the east of the Sea of Japan, China, North Korea, South Korea and Russia, stretching from the Sea of Okhotsk in the north to the East China Sea and Taiwan in the south...
introduced a program from April 1, 2009 until March 31, 2010 (or until the budget is exhausted), offering up to 250,000 yen (~US$2,500) to trade in vehicles 13 years old or more for new environmentally friendly
Green vehicles
Green vehicles may refer to:* Green Vehicles Inc., maker of the Triac * Green vehicle...
fuel-efficient cars, according to environmental performance criteria established by the government. The purchasing rebate is 125,000 yen (~US$1,250) if trading for a mini or kei car
Kei car
Kei cars, K-cars, or , are a Japanese category of small vehicles, including passenger cars, vans, and pickup trucks. They are designed to comply with Japanese government tax and insurance regulations, and in most rural areas are exempted from the requirement to certify that adequate parking is...
, which already get preferential tax treatment, built to specifications defined by law in Japan that place limits on size engine displacement and power. The Japanese government also included a tax break on gasoline-electric hybrid vehicles and other low emission cars and trucks, allocating $3.7 billion for the program.
Luxembourg
In LuxembourgLuxembourg
Luxembourg , officially the Grand Duchy of Luxembourg , is a landlocked country in western Europe, bordered by Belgium, France, and Germany. It has two principal regions: the Oesling in the North as part of the Ardennes massif, and the Gutland in the south...
a scrappage scheme was introduced in January 2009 that allows for a premium if the old car was older than 10 years and the new car to meet CO2 < 150 g/km (1,500 euros) or CO2 < 120 g/km (2,500 euros).
The Netherlands
The Dutch government provides a premium of €750 or €1,000 in association with the car industry. The city of AmsterdamAmsterdam
Amsterdam is the largest city and the capital of the Netherlands. The current position of Amsterdam as capital city of the Kingdom of the Netherlands is governed by the constitution of August 24, 1815 and its successors. Amsterdam has a population of 783,364 within city limits, an urban population...
provides an additional premium of between €250 and €1,000.
Norway
In NorwayNorway
Norway , officially the Kingdom of Norway, is a Nordic unitary constitutional monarchy whose territory comprises the western portion of the Scandinavian Peninsula, Jan Mayen, and the Arctic archipelago of Svalbard and Bouvet Island. Norway has a total area of and a population of about 4.9 million...
a "Vehicle Scrap Deposit Tax" for all motor vehicles was introduced in 1978. When purchasing or registering a new vehicle, a standard €190 tax (as per 2010) is paid to the Norwegian Customs and Excise Authorities. This tax is refunded when scrapping the vehicle.
Portugal
PortugalPortugal
Portugal , officially the Portuguese Republic is a country situated in southwestern Europe on the Iberian Peninsula. Portugal is the westernmost country of Europe, and is bordered by the Atlantic Ocean to the West and South and by Spain to the North and East. The Atlantic archipelagos of the...
has increased a scrappage scheme allowing €1,000 for a car being older than 10 years and €1,500 for a car being older 15 years if the car is being recycled and the new car has an emission standard of CO2 < 140 g/km.
In January 2010, Portuguese Government made law proposal to limit CO2 emissions of the new car to 130 g/km. This proposal will be voted in the beginning of March.
Romania
In RomaniaRomania
Romania is a country located at the crossroads of Central and Southeastern Europe, on the Lower Danube, within and outside the Carpathian arch, bordering on the Black Sea...
a scrappage scheme was introduced in 2005 and it allows customers for 3.800 lei (1 euro = 4,2 lei) if the car was older than 10 years. There is no emission restriction of the new car to be bought. Since 2010, one person can scrap up to three cars and/or use the same amount of vouchers in exchange for a new one.
Number of cars traded
| Year | 2005 | 2006 | 2007 | 2008 | 2009 | 2010 |
|---|---|---|---|---|---|---|
| Cars traded | 14,607 | 15,110 | 16,444 | 30,466 | 32,327 | 189,323 |
Slovakia
In SlovakiaSlovakia
The Slovak Republic is a landlocked state in Central Europe. It has a population of over five million and an area of about . Slovakia is bordered by the Czech Republic and Austria to the west, Poland to the north, Ukraine to the east and Hungary to the south...
a scrappage scheme was introduced that allows for €2,000 (originally €2,500) if the old car was older than 10 years and the new car was below €25,000.
Spain
In SpainSpain
Spain , officially the Kingdom of Spain languages]] under the European Charter for Regional or Minority Languages. In each of these, Spain's official name is as follows:;;;;;;), is a country and member state of the European Union located in southwestern Europe on the Iberian Peninsula...
there is a scrappage scheme (Plan 2000E) with a special credit scheme for a new car (category M vehicle
Vehicle category
A vehicle category classifies a land vehicle for regulatory purposes.- EU classification :In Europe, the classifications for vehicle category are defined by:...
) to reach a level of less than 120 g/km and trucks (category M vehicle
Vehicle category
A vehicle category classifies a land vehicle for regulatory purposes.- EU classification :In Europe, the classifications for vehicle category are defined by:...
) 160 g/km and if the old vehicle was more 10 years or 250,000 km.
United Kingdom
The United Kingdom has introduced a scrappage incentive schemeCar scrap allowance
The UK Vehicle scrappage scheme is a vehicle scrappage scheme that was introduced in the 2009 United Kingdom Budget to encourage UK citizens to purchase a new car or van and scrap an old one that they have owned for more than 12 months...
in the 2009 budget
2009 United Kingdom Budget
The 2009 United Kingdom Budget, officially known as Budget 2009: Building Britain's Future, was formally delivered by Alistair Darling in the House of Commons on 22 April 2009...
. Scrapping of an old car (registered on or before 31 July 1999) would allow for a £2,000 cash incentive - the money burden is shared with £1,000 funded by the government and £1,000 funded by the automobile industry. The program is limited to £300 million allowing for about 300,000 customers to benefit. Many dealers taking part in the scheme were offering more than the recommended £1,000, many as high as £2,000 or even £3,000.
The UK scheme was intended to provide financial support to the motor industry. It is largely assumed that newer cars include a benefit for the environment, however Economist Willem Buiter
Willem Buiter
Willem Hendrik Buiter Willem Hendrik Buiter Willem Hendrik Buiter (born September 26, 1949]] was a member of the Bank of England's Monetary Policy Committee from June 1997-May 2000. He joined the London School of Economics as a chair in the European Institute in September 2005....
questions environmental benefits of the program.
On 28 September 2009, it was confirmed that a further investment from the government was to be introduced extending the scheme further. It would now cover cars registered as late as 29 February 2000.
123 Internet Designs, one of the companies behind the development of the web based system used by Autogreen has now introduced electronic Environmental Waste notices which will be used during the collection and delivery process of the vehicles managed under the scheme.
The scheme closed on 31 March 2010.
Competitively priced cars from traditional "budget" brands sold particularly well in the United Kingdom while the scrappage scheme was in force. These included the Hyundai i10
Hyundai i10
The Hyundai i10 is a 5-door hatchback subcompact produced by the Hyundai Motor Company. It was launched in October 2007, replacing the Hyundai Atos in some markets.The i10 is produced in India at Hyundai's Chennai plant for the domestic and export markets...
and Kia Picanto
Kia Picanto
The Kia Picanto, known as the Kia Morning in South Korea and Chile, Kia EuroStar in Taiwan, Kia New Morning in Vietnam and the Naza Suria or Naza Picanto in Malaysia, is a low cost city car produced by Kia Motors....
.
United States
Federal government of the United States
The federal government of the United States is the national government of the constitutional republic of fifty states that is the United States of America. The federal government comprises three distinct branches of government: a legislative, an executive and a judiciary. These branches and...
program that helps US citizens to purchase a new, more fuel efficient vehicle when trading in a less fuel efficient vehicle. The program officially started on July 1, 2009 and claims began to be processed until July 24, and ended on August 24, 2009, as the appropriated resources were exhausted.
The initial $1 billion appropriated for the system was exhausted by July 30, 2009, well before the anticipated end date of November 1, 2009, due to very high demand. In response, Congress approved an additional $2 billion for the program.
On August 26 the DoT reported that the program resulted in 690,114 dealer transactions submitted requesting a total of $2.877 billion in rebates. At the end of the program Toyota accounted for 19.4 % of sales, followed by General Motors
General Motors
General Motors Company , commonly known as GM, formerly incorporated as General Motors Corporation, is an American multinational automotive corporation headquartered in Detroit, Michigan and the world's second-largest automaker in 2010...
with 17.6 %, Ford
Ford Motor Company
Ford Motor Company is an American multinational automaker based in Dearborn, Michigan, a suburb of Detroit. The automaker was founded by Henry Ford and incorporated on June 16, 1903. In addition to the Ford and Lincoln brands, Ford also owns a small stake in Mazda in Japan and Aston Martin in the UK...
with 14.4 %, Honda
Honda
is a Japanese public multinational corporation primarily known as a manufacturer of automobiles and motorcycles.Honda has been the world's largest motorcycle manufacturer since 1959, as well as the world's largest manufacturer of internal combustion engines measured by volume, producing more than...
with 13.0 %, and Nissan with 8.7%. The Toyota Corolla
Toyota Corolla
The Toyota Corolla is a line of subcompact and compact cars manufactured by the Japanese automaker Toyota, which has become very popular throughout the world since the nameplate was first introduced in 1966. In 1997, the Corolla became the best selling nameplate in the world, with over 35 million...
ranked as the program's top seller and the Ford Explorer
Ford Explorer
The Ford Explorer is a sport-utility vehicle sold in North America and built by the Ford Motor Company since 1990, as a replacement for the smaller but related Ford Bronco II. It is manufactured in Chicago, Illinois...
4WD
Four-wheel drive
Four-wheel drive, 4WD, or 4×4 is a four-wheeled vehicle with a drivetrain that allows all four wheels to receive torque from the engine simultaneously...
was the top trade-in.
The Department of Transportation also reported that the average fuel efficiency
Fuel economy in automobiles
Fuel usage in automobiles refers to the fuel efficiency relationship between distance traveled by an automobile and the amount of fuel consumed....
of trade-ins was 15.8 mpg, compared to 24.9 mpg for the new cars purchased to replace them, translating to a 58% fuel efficiency improvement. However, a study by researchers at the University of Michigan
University of Michigan
The University of Michigan is a public research university located in Ann Arbor, Michigan in the United States. It is the state's oldest university and the flagship campus of the University of Michigan...
evaluated the effects of the program on the average fuel economy considering a baseline without the existence of the program, since there was already a trend for buying vehicles with higher fuel economy due to the high gasoline prices of 2007 and 2008, and the economic crisis of 2008. The study found that the program improved the average fuel economy of all vehicles purchased by 0.6 mpg in July 2009 and by 0.7 mpg in August 2009
Comparison among selected countries
| Comparison of scrappage programs for selected countries | ||||
|---|---|---|---|---|
| Country | Maximum incentive |
Age requirement |
Emissions requirement |
Cost to government |
| $4500 (~€3167) | Under 25 years old | |
|
|
| €2500 (~$3552) | Over 9 years old | |
|
|
| £2000 (~$3336) | Over 10 years old | |
|
|
| €1000 (~$1421) | Over 10 years old | |
|
|
| €3500 (~$5024) | Over 10 years old | |
|
|
| Source: The Economist The Economist The Economist is an English-language weekly news and international affairs publication owned by The Economist Newspaper Ltd. and edited in offices in the City of Westminster, London, England. Continuous publication began under founder James Wilson in September 1843... . Notes: (1) The U.S. program does not have an emission requirement but instead set a fuel efficiency Fuel economy in automobiles Fuel usage in automobiles refers to the fuel efficiency relationship between distance traveled by an automobile and the amount of fuel consumed.... requirement.(2) The U.K. incentive is split between government and the dealer. (3) Italy and France required that new cars do not emit more than 160 grams of carbon dioxide Carbon dioxide Carbon dioxide is a naturally occurring chemical compound composed of two oxygen atoms covalently bonded to a single carbon atom... per km. |
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Reception
- Economic forecaster and former Republican Senate candidate Peter SchiffPeter SchiffPeter David Schiff is an American investment broker, author and financial commentator. Schiff is CEO and chief global strategist of Euro Pacific Capital Inc., a broker-dealer based in Westport, Connecticut and CEO of Euro Pacific Precious Metals, LLC, a gold and silver dealer based in New York...
argued that it is economically inefficient to destroy cars in an attempt to stimulate the economy, likening it to the broken window fallacy.
- The EconomistThe EconomistThe Economist is an English-language weekly news and international affairs publication owned by The Economist Newspaper Ltd. and edited in offices in the City of Westminster, London, England. Continuous publication began under founder James Wilson in September 1843...
argued that the program is the kind of policy required to avoid the liquidity trapLiquidity trapA liquidity trap is a situation described in Keynesian economics in which injections of cash into an economy by a central bank fail to lower interest rates and hence to stimulate economic growth. A liquidity trap is caused when people hoard cash because they expect an adverse event such as...
in times of economic depression. The article states that:"... the boost in demand that the rebates have brought about is exactly the sort of stimulus that is urgently needed to escape what John Maynard Keynes called a “liquidity trap”. According to his theory, consumers may become so worried about the economy that they cling to as much liquid wealth as possible, cutting their spending sharply and thereby triggering precisely the slump they feared. Moreover, as stimulus policies go, cash-for-clunkers looks to be unusually effective. Admittedly, that is not an especially demanding measure, given that Keynes favoured, if need be, burying money in bottles for people to dig up and spend. Cash-for-clunkers has many benefits beyond simply getting more money passing through the hands of consumers and into aggregate demand."
See also
- Car longevityCar longevityCar longevity is of interest to many car owners and concerns several things: maximum service life in either miles or time , relationship of components to this lifespan, identification of factors that might afford control in extending the lifespan. Barring an accidental end to the lifespan, a car...
- Electric vehicle conversionElectric vehicle conversionAn electric vehicle conversion is the modification of a conventional internal combustion engine vehicle to electric propulsion, creating an all-electric or plug-in hybrid electric vehicle.-Elements of a conversion:...
- European emission standardsEuropean emission standardsEuropean emission standards define the acceptable limits for exhaust emissions of new vehicles sold in EU member states. The emission standards are defined in a series of European Union directives staging the progressive introduction of increasingly stringent standards.Currently, emissions of...
- 2008 European Union stimulus plan2008 European Union stimulus planOn 26 November 2008, the European Commission proposed a European stimulus plan amounting to 200 billion euros to cope with the effects of the global financial crisis on the economies of the members countries...
- Gas-guzzlerGas-guzzlerGas-guzzler commonly refers to a vehicle that consumes fuel inefficiently.The term originally came into use in the US when congress established Gas Guzzler Tax provisions in the Energy Tax Act of 1978 to discourage the production and purchase of fuel-inefficient vehicles...
- Parable of the broken windowParable of the broken windowThe parable of the broken window was introduced by Frédéric Bastiat in his 1850 essay to illustrate why destruction, and the money spent to recover from destruction, is actually not a net-benefit to society...