Specialist Car Insurance Unaffected By Success of UK Government Car Scrappage Scheme

Car Dealers across the country are urging the UK Government to extend the car scrappage scheme well into the summer of 2010, in order to help maintain increased sales levels of new cars and boost the local economies.

Under the current scheme, buyers can qualify for a £2,000 discount on a new car with a trade-in on a vehicle that is more than 10 years old.

The scrappage scheme was launched in May 2009 with £300 million of funding from the Government and car companies. It will run until March 2010, or when its funding runs out, whichever is sooner.

The scheme continued to help new car sales in August with sales up 6 per cent from a year ago, the second consecutive month of growth.

However, sales so far this year are still 21.5 per cent lower than the same period in 2008, showing that the recession is still biting and questioning the overall impact of the policy. Car Insurance revenues are down in parallel to sales.

In July 2009, UK car sales rose by 2.4 per cent, the first rise since April last year which must given all the other economic factors of the time, be attributed to participation in the scheme.

Dealerships across the UK have reported an upturn in sales as a result of the scrappage scheme with small, low-priced models proving the most popular.

The effect on the specialist car insurance market has been minimal, although one could argue that many future classics have been taken off the road and crushed.

Increased sales in new cars combined with a downturn in production levels from all UK car manufacturers has meant that some new models are now difficult to get hold of.
You have only got to look at the amount of new cars, or lack of them, that appear on the new series of Top Gear, to realize there is something very wrong with the UK Motor Industry.

As a result of the shortage of new models and a waiting list, some car auctions are reporting knock-on benefits as buyers choose used small cars if new models are not available.

James Hawkins, director of Truro-based Hawkins Motors, said he would like the scrappage scheme to continue.

"It's had a massive impact. We're probably getting 200 enquiries through a month. I would like to see it extended at least until the spring," he said.

"In terms of what it has done for the business, it has increased sales rates probably by three times. Korean brands are doing very well. Cars around the £5,000 mark are setting the theme and can be difficult to get hold of.

"The recession has had an impact but this has taken some of the problem away."

It appears that for many small regional dealerships across the UK, the Government Car Scrappage scheme has been a great sucess and has helped the overstretched economies of rural communities such as Cornwall, through the worst of the current recession.

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