Why a Car Scrappage Scheme?

invincibleirish

It has been widely mentioned in the media that a new scrappage scheme is going to be introduced in todays budget. Why is this?

-We have a Green Party who say they focus on public transport, surely they cannot support a subsidy to private transport? the CIE group have had to deal with cuts this year and next year, priorities are screwed up imo.

-We've had over a decade of record car sales since the last scrappage scheme, one economic crash later we still have lots of new cars on the roads, so why incentivise?

- The direct beneficiaries of this will be the car dealers and car manufacturers, one a small group irrelevant in the greater scheme of things, the other are foreign companies.

-Who is going to avail of this scheme? most people who drive bangers are hardly going to buy a new car off the back of a 1000 - 3000 euro subsidy, a scrappage system will just give relief to people who already will be buying new cars anyway aka rich folk who don't further incentives.

If a scrappage scheme is introduced it will be a perfect example of how screwed up this country is, one small yet politically well connected lobby group shouts loudest - the car dealers with 'self made' Bill Cullen their main cheerleader - and subsidies will be offered to people who in all likelihood don't need it to buy new cars whilst other areas get cuts in funding this year and next year.

The argument has been made that the Gov will in essence be giving a subsidy to itself by developing a new scrappage scheme, but to my mind its the latest ineffectual response by our Government, yet another stick to beat this gombeenarchy with.

Oliver1985

It is a joke first they tell you we want people out of there cars and on to public transport then they cut there funding which has a knock on effect of less services !!!

Grrrrr fuel going up, less public transport services it really is leaving people with less options!!!
Would not suprise me if they sneak a congestion charge in the budget to!!!!!! :eek::eek:

Ahhhhhhhhhhhhhhhhhhhhhhhhhhhhhhhhhhhhhhhh!!:eek:

bijapos

invincibleirish wrote: »

one small yet politically well connected lobby group shouts loudest - the car dealers with 'self made' Bill Cullen their main cheerleader - .

You have just answered your own question, it's because of constant and permanent pressure by the SIMI. If there is one and if its less than 2000€ they'll have another winge. When the scheme is ended they'll winge again, but thats the way countries are run. Whoever has the best lobbyists wins.

That scrappage schemes don't work (see reaction in Germany) is a side point and often ignored.

Btw EP Mooney went into liquidation recently, in 2007 at the height of the car boom they made a LOSS of €830,000. Seems they over invested in property and so on.

amacachi

Great way to get our balance of payments in order. :pac: I'm no environmentalist but it's such a stupid idea on so many levels.

jayotala

Maybe its to try and help the motortrade and all the individuals who are employed directly and indirectly as a result of car sales etc.

You need to think of the bigger picture.

wilson10

SIMI and other spokesmen for the car retailers talk about the motor industry in crisis.

We don't have a motor industry in this country, we have a car retailers association.

A scrappage scheme will be an incentive to people to take out loans to buy imported goods that they could do without.

How does this help the economy ?

silverharp

In my best Fr Dougal accent - absolutely nothing can go wrong if someone with a 10 year old car takes out a car loan that will run over the next 4 or 5 years.

if only people would get it in thier heads that they need to take on more debt for the sake of the economy.

Dickerty

bijapos wrote: »

That scrappage schemes don't work (see reaction in Germany) is a side point and often ignored.

It worked in the US, nearly 700,000 cars sold.

Not only was that a huge outlay of spending, but the new fleet resulted in a 58% fuel efficiency improvement (compared to the 700,000 traded in), as well as improved safety and spec.

Mitch Connor

wilson10 wrote: »

SIMI and other spokesmen for the car retailers talk about the motor industry in crisis.

We don't have a motor industry in this country, we have a car retailers association.

A scrappage scheme will be an incentive to people to take out loans to buy imported goods that they could do without.

How does this help the economy ?

Because there would be thousands of euro paid in VRT and Motor Tax for each new car sold. It would help keep the car sellers going which keeps jobs going which keeps that income tax coming and also means less money being spent on the dole as a result of people losing jobs.

newman10

Whats the point is a scrappage scheme when no finance is available

invincibleirish

jayotala wrote: »

Maybe its to try and help the motortrade and all the individuals who are employed directly and indirectly as a result of car sales etc.

You need to think of the bigger picture.

Bigger picture? elaborate for me please how a scrappage scheme fits in with the bigger picture?. The motor trade is inconsequential in the greater scheme of things, why should they get special incentives denied to other areas of the private sector?

RoyalMarine

newman10 wrote: »

Whats the point is a scrappage scheme when no finance is available

i agree here 100%.

its nearly impossible to get a bank to grant you a loan for a car if your income isn't huge.

invincibleirish

Mitch Connor wrote: »

Because there would be thousands of euro paid in VRT and Motor Tax for each new car sold. It would help keep the car sellers going which keeps jobs going which keeps that income tax coming and also means less money being spent on the dole as a result of people losing jobs.

The car sellers have had a bonanza over the past 15 years, why do they deserve special incentives?

Motor tax will be paid on the 'old' car anyway so really its only VRT that is being given to the Gov.

The point of keeping people out of the dole doesn't hold much weight tbh, there are plenty of other areas of the private sector which are equally deserving of subsidies, why not offer a subsidy for people to shop in Centra and Super Valu?

How many people are employed in the selling of new cars?

amacachi

Dickerty wrote: »

It worked in the US, nearly 700,000 cars sold.

Not only was that a huge outlay of spending, but the new fleet resulted in a 58% fuel efficiency improvement (compared to the 700,000 traded in), as well as improved safety and spec.

How many of those would have been bought anyway? 58% fuel efficiency is irrelevant, cars pollute way more being made than running.
The safety, nice, again wondering about how many would've been sold anyway.

ardmacha

Whats the point is a scrappage scheme when no finance is available

Because responsible people save for their car, rather than buying it on hock.

seamus

The problem with what seems to be proposed is as other people point out - you're talking about trading in a ten-year old car (presumably worth less than €2000), and getting a €2k rebate on a brand new car with a minimum cost of €12,000.

Most people who have ten year old cars probably would have upgraded already, which means that those who haven't upgraded, haven't done so due to finance. So there's no way you're going to encourage people who are already tight on cash to take on a five-year motor loan of €10k (minimum) @ €220/month, when they no doubt have a mortgage and kids and whatever else sucking on their finances.

A better idea would be to allow "scrappage" against any vehicle under 4 years old and in certain emissions brackets - say A and B. If the second-hand car is €7k on the road and I get a €2k scrappage discount on it, it's a much more attractive prospect.

This way, you get the second hand market moving, which in turn gets the new car market moving and you're not creating any kind of false economies.

I can see such a car scrappage scheme creating a "black market" for bangers. So if I'm actually looking to buy a new car anyway, I pick a 1992 Nissan Micra out of the buy and sell, pay €150 for it, drive it onto the dealer's forecourt and walk away with a €1350 discount on my brand new car.

You can't entirely compare the US scheme to here. Americans tend to hold onto their vehicles for longer (i.e. until they die) because parts and service are much cheaper. The cost of new vehicles is also way less than it is here, meaning that new cars are more affordable to the average American.

For example, the Ford Focus S 2010 is $16,000 in the US. The comparable model here (Focus Style) is €21,000. Even if the exchange rates were at parity, that's still a massive difference.
When you look at earnings figures, the cost of that Focus is 33% of the average American salary.
In Ireland, that Focus costs about 60% of the average Irish salary.

So in relative terms, a new car in Ireland is twice as expensive as one in the US. This is why a scrappage scheme won't work.

Gurgle

jayotala wrote: »

Maybe its to try and help the motortrade and all the individuals who are employed directly and indirectly as a result of car sales etc.

You need to think of the bigger picture.

The big picture: How many individuals?

not counting mechanics or motor factors, they will have more work with fewer new cars.

And why should these individuals, in an over-serviced market sector (a sector proven to be up to its neck in corruption, cartels and price fixing) get a special reward over all the other sectors who are suffering?

Arnold Layne

ardmacha wrote: »

Because responsible people save for their car, rather than buying it on hock.

Well, if you were a responsible person that had savings in excess of €20K you would save it in case of job loss or reduction in salary

Pharaoh1

The last scheme was a bit of a scam in my opinion and I'm sure this one will be similar.
- If you go to a dealer with cold hard cash you will get a serious discount on a new car. You would need to go to a few get the absolute lowest price (written quote) and then go back and say "by the way I actually have a car to scrap" and see if you get another 2k off. Some will do this, many won't.
- I knew of several people who convinced themselves that their car was worth "nothing" when in reality it could have fetched 1200 to 1500 euro (many were extremely low mileage and in great condition).
Getting a "great deal" on scrappage meant that many perfectly good cars were crushed.

Lord Trollington

Gurgle wrote: »

The big picture: How many individuals?

not counting mechanics or motor factors, they will have more work with fewer new cars.

And why should these individuals, in an over-serviced market sector (a sector proven to be up to its neck in corruption, cartels and price fixing) get a special reward over all the other sectors who are suffering?

Ha ha ha, that one made me laugh.

The whole banking system is corrupt, and they got billions and billions, in fact the true cost may never be known.

Your singling out one or two dodgy dealers and painting the whole sector with the one tarnished brush which is unfair and unjust on genuine dealers struggling to make a living and keep their employee's in Jobs.

guano_jim

why not have a scrappage scheme for houses too?

Lord Trollington

guano_jim wrote: »

why not have a scrappage scheme for houses too?

Has to be post of the day.

jayotala

The bigger picture is all the people that earn a living in some shape or form because of the motortrade, not just people that sell cars. From the people who provide cleaning products, sell petrol, do the accounts, maintain the equipment used in the garages, the people that build the garage, the suppliers of the building blocks, the revenue who are the ones who make money from everything everybody contributes to the motortrade or around the motortrade, to the people that make the cars. The list could go on and on. If the motortrade goes under there will be a huge knock on effect. Its as simple as that.

The fact the scheme will only offer a discount on VRT on low emissions cars will remove old cars that don't help with c02 emissions, is a small step in making the country a little more eco friendly.

Supervalue and centra don't need special incentives for people to shop there because the products are relatively cheap in comparison to cars and their products are needed on a day to day basis. You can live without a car or getting a car serviced. You can't live without food.

Suff

guano_jim wrote: »

why not have a scrappage scheme for houses too?

Great idea!!! ...joking aside.

jayotala

guano_jim wrote: »

why not have a scrappage scheme for houses too?

Do they not have something similiar.... No stamp duty for first time buyers.

kayos

guano_jim wrote: »

why not have a scrappage scheme for houses too?

After the flooding it might not be a bad idea

Lord Trollington

There is 50,000 people, or was 50,000 people employed in the motor industry in Ireland.

10,000 jobs already lost, and without doubt more to go in the coming year.

Thats 20 times more than the total number of jobs lost in waterford Crystal a number of months back.

The Motor trade contributed €2billion in VRT and VAT reciepts in 2007.

€1.5billion in 2008.

It is sector in the Irish Economy, regardless of what people say.

guano_jim

wasnt joking! It ticks lots of boxes. Employs people, loads more than the car industry, the spend is greater, (plus a greater % of the spend stays in ireland as opposed to exporting the profits to foreign car makers) its a *LOT* greener, has a longer service life. the goodness keeps going on and on....

bluefinger

jayotala wrote: »

The bigger picture is all the people that earn a living in some shape or form because of the motortrade, not just people that sell cars. From the people who provide cleaning products, sell petrol, do the accounts, maintain the equipment used in the garages, the people that build the garage,

There will still be the same amount of cars on the road, so those jobs shouldn't be affected.

aguestie

This is simple - A Scrappage Scheme has the potential to grow the Govt Coffers. It will keep a lot of people in jobs that are currently under threat (so not inconsequential - invincibleirish)! As with any other trade, there are rogue builders, bankers, solicitors etc etc so lets not keep digging at the Motor Trade here. It is a huge employer to a lot of skilled people including Mechanics, Accountants, Admin, Sales, Marketing etc. etc.
Now, the Greens need to take a long hard look at themselves - maybe they can do this while they are counting frogs!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!! ;-)

wilson10

Mitch Connor wrote: »

Because there would be thousands of euro paid in VRT and Motor Tax for each new car sold. It would help keep the car sellers going which keeps jobs going which keeps that income tax coming and also means less money being spent on the dole as a result of people losing jobs.

That's the thinking that got us into the hole we're in.

Build more houses, more stamp duty and income tax and VAT into the government coffers. everybody's happy.

Trouble is, it has to be paid for.

guano_jim

aguestie wrote: »

This is simple - A HOUSE Scrappage Scheme has the potential to grow the Govt Coffers. It will keep a lot of people in jobs that are currently under threat (so not inconsequential - invincibleirish)! As with any other trade, there are rogue builders, bankers, solicitors etc etc so lets not keep digging at the Building Trade here. It is a huge employer to a lot of skilled people including Builders, Accountants, Admin, Sales, Marketing etc. etc.
Now, the Greens need to take a long hard look at themselves - maybe they can do this while they are counting frogs!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!! ;-)

the greens can go stick a fork in their ass and turn over: they are DONE.

It's fair to say that the people advocating this scheme in the thread are mechanics or such and don't really have any sort of grasp when it comes to economics..

gurramok

How will it compete against the massive private UK imports which have been consistently cheaper hence luring Irish buyers away from the dealers to the UK ?

jayotala

wilson10 wrote: »

That's the thinking that got us into the hole we're in.

Build more houses, more stamp duty and income tax and VAT into the government coffers. everybody's happy.

Trouble is, it has to be paid for.

Build more houses, that's one of the reasons this country is in a mess. Property and the greed that came with it.

jayotala

Rojomcdojo wrote: »

It's fair to say that the people advocating this scheme in the thread are mechanics or such and don't really have any sort of grasp when it comes to economics..

I don't think that's a very fair comment to make. Mechanics or such as you put it have more common sense and intelligence then a lot of people. Some economists don't live in the real world and don't see things as they should be seen.

I for one am an accountant and have an interest in our economy. I'm willing to at least think positive about certain agendas that are there to try and help.

Lord Trollington

Rojomcdojo wrote: »

It's fair to say that the people advocating this scheme in the thread are mechanics or such and don't really have any sort of grasp when it comes to economics..

Give us your insight to Economics, please!? Quick! I'm on the edge of my seat.

Terrible move for our economy it amounts to a subsidy for Japanese, Korean, French and German industry. It encourages people to take out MORE LOANS! It would have made more sense to reduce annual motor tax FFS!!

whycliff

whycliff wrote: »

There is 50,000 people, or was 50,000 people employed in the motor industry in Ireland.

10,000 jobs already lost, and without doubt more to go in the coming year.

Thats 20 times more than the total number of jobs lost in waterford Crystal a number of months back.

The Motor trade contributed €2billion in VRT and VAT reciepts in 2007.

€1.5billion in 2008.

It is sector in the Irish Economy, regardless of what people say.

Its not an industry its a retail sector. It relies on BORROWED MONEY the stuff thats been strangling our economy. Sure it brings in taxes in VRT and VAT but only in the same way that the housing boom did!! Through borrowed money!!

Lord Trollington

Deleted User wrote: »

Terrible move for our economy it amounts to a subsidy for Japanese, Korean, French and German industry. It encourages people to take out MORE LOANS! It would have made more sense to reduce annual motor tax FFS!!

How does ti, in the History of the state, there has never been as mcuh money on deposit?
More ill-informed tripe.

Zamboni

Deleted User wrote: »

Its not an industry its a retail sector. It relies on BORROWED MONEY the stuff thats been strangling our economy. Sure it brings in taxes in VRT and VAT but only in the same way that the housing boom did!! Through borrowed money!!

That needs a big +1

gaeilgegrinds

I'll be going for this! Have a new family car and a ten year one that was mine! I've saved up so should work out ok too. Thank God!

AlekSmart

I remember reading some posts on another forum which centred on some very close links between the SIMI folks in Co Meath and Minister for Transport Noel Dempsey.

It related to innocious stuff revolving around Golf Classics and other relaxing pursuits.

It would surely not have any bearing on this highly desirable "Innovation" which will benefit a great many SIMI members.....

Mr Dempsey is a keen golfer and by all accounts regards a good big boot as an absolute necessity in any State Car.

It appears that the super-dooper Lexus Hybrid which appeared in the Ministerial Car Pool last year fell at that particular hurdle as the extra Batteries took away a big chunk of that valuable Golf-Bag space.

Mercedes Benz 1
Lexus 0

Mercedes wins hands down on aggregate

seamus

I have a ten-year-old car to dispose of but I can't see myself forking out stupid amounts on a new car when I could pay half the price for something 3 or 4 years old.

soden12

whycliff wrote: »

The Motor trade contributed €2billion in VRT and VAT reciepts in 2007.

€1.5billion in 2008.

It is sector in the Irish Economy, regardless of what people say.

It didn't just hand over that money. It was taxation on overpriced goods bought by people. They could just have easily spent their loans on flatscreen TVs.

All those 16euro drops in Child Benefit are now being used to subsidise the motor trade.

Is all this another scheme to get people into further debt ?

wilson10

whycliff wrote: »

How does ti, in the History of the state, there has never been as mcuh money on deposit?
More ill-informed tripe.

Yeah, thousands of people with bulging bank accounts, driving around in 10 year old bangers.

I don't think so.

evolving_doors

seamus wrote: »

I can see such a car scrappage scheme creating a "black market" for bangers. So if I'm actually looking to buy a new car anyway, I pick a 1992 Nissan Micra out of the buy and sell, pay €150 for it, drive it onto the dealer's forecourt and walk away with a €1350 discount on my brand new car.

Think you have it sussed Seamus..but...just to extrapolate on this shenannigans a bit further..

Point 1. Very Very Very few Joes with a car that's older than 10 years is going to buy a brand spanking new car (myself included). The minister knows this, but just follow this logic to see how it'll really work..

Point 2. Lets just say you're not that ordinary joe with a banger thinking of buying a spanking new car (dave macwilliams will insert clever name). He has 2 options...

• Ask for a good discount (on top of the eddie gobbs recession special)...The dealer will scratch his head for a while and remember the multitude of bangers gathering dust out the back. "Hmm why don't I just say that that's the banger yer man just brought in".. and Voila..instant 1,500 discount.
  
• Buy an old banger for peanuts and haul it in for yer discount..
  

Either way, the real outcome won't be an increase in boyos with bangers buying a 2010 car. Unless he's trading up a few years and the dealer is looking to bank the banger he has for the real new car buyer.

Could work..but it really needs those new car buyers to start lookin again and ask for "The Minister for Breathlessness To Convey Sincerity" discount..

Kai

For the record i drive a 10 year old car, do a lot of miles each day. I could have bought a new one by getting a small loan and the rest from savings but i didnt as i saw it as a waste of money.

I didnt buy a new car, i didnt over stretch myself with a bigger mortgage than i could afford, I didnt take out loans for anything just because the banks were willing to throw money at me. The result of which means i can live quite comfortably on my slightly higher than average wage even if interest rates go up.

I feel sorry for people who have gotten themselves into major debt but they have only themselves to blame. Obviously people who have been laid off is a completely different story, if i lost my job then things would be much worse. Im only talking about people who have jobs but are up to their necks in debt, living in fear of interest rate hikes. There are too many people blaming governments and banks for corruption as if this is something new. Sure they played a part but no one forced anyone to be stupid with money.

If you are driving a 10 year old car and think using the scrappage scheme + a big loan to get a new car is a good idea then you are just repeating the mistakes others have made and you've learned nothing from what has happened. A loan may be good for the banks and the economy but not for individuals.

evolving_doors

Kai wrote: »

If you are driving a 10 year old car and think using the scrappage scheme + a big loan to get a new car is a good idea then you are just repeating the mistakes others have made and you've learned nothing from what has happened. A loan may be good for the banks and the economy but on a individual

Too true Kai ,this scheme is not for people to trade from a 10 year old car to a new car. It's all just hanky panky so the dealers can bank the bangers against new car sales. An Irish solution to an Irish problem.

Cheap Thrills!

^^Gotta agree with that. I've a 10 year old bucket which I would love to upgrade to maybe a 3 or 4 year old bucket....

But I'm never buyin a new car so this scheme is irrelevant to me if thats who they are pretending to aim it at.

GreeBo

Cheap Thrills! wrote: »

^^Gotta agree with that. I've a 10 year old bucket which I would love to upgrade to maybe a 3 or 4 year old bucket....

But I'm never buyin a new car so this scheme is irrelevant to me if thats who they are pretending to aim it at.

Same, if they were trying to "Green up our fleet" then it shouldnt be brand new cars only.
However I dont know how you would figure out the logistics of a scrappage schema that included 2nd hand cars?!