The £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 has been revealed.
From Monday, owners of cars 10 years old or more will get £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 £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 £12.5 billion in depreciation after just one year
- Purchasing one of the top ten most popular new cars costs £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 £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.
Mark Monteiro, spokesman for uSwitch.com, said: “The Government’s car-scrappage scheme has been introduced to give the ailing motor industry a much needed shot in the arm by enticing motorists to participate with a £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, which dents the value a car from the moment you drive off the forecourt.”
He went on: “When choosing a new vehicle, motorists should ensure they research the rate of depreciation of their desired new car, as research highlights how some of the top 10 most-popular vehicles hold their value far better than others.
“Any motorists tempted to take advantage of the scheme should research the cost of insuring their desired new vehicle as a matter of priority, as the cost could be significantly higher than they are currently paying for their old banger.
“All drivers who are planning to switch their old cars for a newer model need to be prepared for a hike to their premiums of up to 30%.”