I listed likely winners and losers from the German car scrappage scheme a while ago. Included among the 'winners' were "People who happened to own a second-hand car that was at least nine years old (the value of which must have increased to at least €2,500)."
I'm not sure if this was an intended consequence or not, but now that the car scrappage scheme has been running in the UK for a few months, we now see articles like this:
Scrappage scheme: second-hand car shortage causes prices to soar
Second-hand cars are increasing in value – by an average of £600 so far this year – because of a severe shortage of supply...
This economics, it's not rocket science is it?
Although I'll have to mark myself down for assuming that the price rises would only affect older cars; now that the value of older cars is underpinned at £2,000, this has of course rippled up the chain, which adds to the effect of there being overall fewer second hand cars up for sale (which in turn also has something to do with the fact that companies are replacing their fleets less often to save a bit of money, but if people are trying to save money, that would also have the effect of pushing values down, so this effect might net off).
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8 comments:
Therefore either self-actualizing or getting the £2000 off the playing field.
Yet again we have the consequences of stupid politicians sticking their fingers into things they just do not understand. It does me 'ead in.
Further remarks:
Lola Fleet - Defender 1996 value approx 4500. No scrappage benefit.
Rover 100 value nil. But now £2,000
Ford Mondeo Estate 1996 (does that qualify?) value £200. Now £2,000
Ford Escort M Reg. Value £0. Value now £2,000.
Golf M Reg. Value £250. now £2,000.
All of the above taxed and tested!
My economics hat abhors the scrappage scheme. My selfish hat is quite keen on it.
A scheme to stop poorish people finding cars they can afford: well done, Labour.
JH, exactly. Once everything has settled down, the incentives will be competed away and there will no longer be any advantage in scrapping a car, until such a time as they announce the scheme will be ended again.
L, that's one heck of a fleet. Ford Mondeo certainly qualifies (over ten years old) but the new owner has to own it for a year to be able to trade in.
D, exactly. They've successfully transferred wealth from the little guy to people in the middle like Lola.
MW - My fleet. I have four daughters! I have run them on the classic '£250 and throw it away in two years' cars. They each 'own' the car they use, therefore each qualifies for scrappage bonus. But I have worked out that the car co keeps the Gov't 1000 quid.
L, your daughters have very manly cars (apart from the Defender that sounds a bit 4x4-ish), that's what fooled me. Don't women either like 4x4's or tiny icky cars like Fiats or Minis?
Defender's mine. Wife has X-Type Estate (a treat from her to her). I am a bit of a petrol head. I have infected my daughters. Anyway I buy the best value cheapest cars I can to keep them mobile (rural area etc etc).
I tried to do a bulk deal scrappage scheme for four Panda 1.2 Dynamic Eco thingies in excahnge for the four daughters cars. So, Panda's are about 7500 retail. You can get them for 6000 - 6500 from various places. £1000 scrappage plus £1,000 manufacturers scrappage bonus would make that 4000 - 4500 or say 16,000 - 18,000 for four new cars. Guess what - can't get FIAT to play!! I am surprised - not.
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