Depreciation Wipes Out Car Scrap Scheme

THE Pounds 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 was revealed today.

From Monday, owners of cars 10 years old or more will get Pounds 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 Pounds 2,000 incentive is wiped out in depreciation in just 88 days of owning the new car

- In total, new vehicles purchased under the Government's car scrappage scheme are set to lose Pounds 12.5 billion in depreciation after just one year

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

- The UK's best-selling car, the Ford Focus Style, loses Pounds 8,635 or 51% of its value in the first year

- Drivers should read the small print on car insurance policies as the write-off value varies substantially between policies.

uSwitch.com's Mark Monteiro said: "The Government's scheme has been introduced to give the ailing motor industry a much needed shot in the arm by enticing motorists to participate with a Pounds 2,000 incentive.

"However, while this is a positive bonus for consumers, it seems even this payout can't hold its weight against the magnitude of vehicle depreciation."

AA president Edmund King said: "The scrappage scheme will benefit hundreds of thousands of consumers. This analysis is irrelevant and misleading."

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