Don’t panic about cash for bangers scheme

And we’d be the first to admit that, on the face of it, the “cash for bangers” proposals did cause us at least a few moments of concern. Now, however, that it’s all finally been announced and the details bottomed out, we’re all heaving a huge sigh of relief. That’s because, whichever way you look at it, we don’t actually think it’s going to have any real impact on the used market, for several reasons, at least in the short to medium term.

Firstly, we agree with Glass’ on this one. These discounted new models won’t start to make quality late-plates look unpalatably expensive. If 2k was going to make all the difference, new car sales wouldn’t be in the doldrums like they are right now. After all, manufacturers have been discounting like crazy over recent months – and many to the tune of more than £2k if you negotiated really hard – with no visible impact on new sales. So why should now be any different, just because the Government is going to stump up half of the discount?

Secondly, think about who currently drives models that are ten years old or more. Chances are, if you’re not a classics or retro enthusiast, if you’re driving round in a T-plate or older, then it’s because you don’t have the cash to trade up. Statistics show that the majority or drivers of older plates are on low incomes so, an extra £2,000 towards the price of a shiny new motor isn’t really going to make much difference, especially when you consider just how tight finance is right now. The ideal candidates for this scheme simply aren’t going to be able to borrow enough to take up the offer.

So, our fears seem ungrounded. Whilst we worried that two-grand-in-the-hand might start to erode the differential between new and used, particularly as residuals had risen so sharply over the past few months, the fact is that there simply aren’t enough potential buyers out there who will qualify for the scheme to dent the used market.