In the wake of the financial crash, car buying in Britain juddered to a halt.
Sales of new vehicles fell by more than 20 per cent at the end of 2008, and in May 2009 a national scrappage scheme was introduced.
In the following 14 months it was a roaring success, with almost 400,000 new vehicles purchased under the scheme.
Now, scrappage schemes are back in vogue — but ostensibly because of air quality, rather than to stem a collapse in sales.
Ford on Tuesday became the latest carmaker to unveil a scheme, offering to pay motorists £2,000 off the price of its newer vehicles if they ditched cars dated 2009 and earlier.
It follows on the heels of BMW and Mercedes-Benz, which have set out trade-in schemes to try and get older diesel vehicles off the road.
Air quality has risen up the public agenda, with the government pledging to ban cars that run only on petrol or diesel by 2040, while London will bring in an ultra-low emission zone in 2019.
But ministers have stopped short of a full national scrappage scheme to get older diesels off the road — passing the decisions to local authorities, and leaving the car industry itself to take the initiative.
“Removing generations of the most polluting vehicles will have the most immediate positive effect on air quality, and this Ford scrappage scheme aims to do just that,” says Andy Barratt, managing director of Ford UK.
But analysts and dealers have questioned whether the real impact of the schemes will simply be to bolster car manufacturers’ sales at a time when the market is slipping.
After years of rising sales, Britain’s car market has peaked, and new car purchases have fallen every month since April.
The market is expected to decline this year and next, as consumer sentiment slackens and the low pound feeds into rising prices.
Ford’s scheme targets cars sold before 2010 and is aimed at drivers who would normally buy cheaper used cars rather than new vehicles.
“These are consumers who would probably not have bought a new car,” says Daksh Gupta, chief executive of car dealership group Marshall Motors.
Consumers who receive £2,000 for their old car are therefore unlikely to be able to buy a new car, which will cost north of £10,000, outright — pushing more consumers on to pay-monthly Personal Contract Purchase schemes (PCP) that have become common in the industry.
More than 80 per cent of new cars are sold on PCP, while under half of used cars use the finance method, which is popular with consumers as the repayments only cover the depreciation of a car’s value, thus significantly lowering the monthly instalments compared with a traditional bank loan that covers the value of the whole car.
If one of the intentions of the scheme was to push more people to buy cars, it is already working.
Mr Gupta adds that his dealers for all the brands that recently unveiled schemes, BMW, Mercedes and Ford, saw increased orders placed on Tuesday following Ford’s widely-publicised announcement.
“This should definitely be incremental to sales,” he says, pointing to the boost in sales provided by the scrappage scheme of 2009-10, which also offered £2,000 to upgrade old cars.
As such, others are expected to join the scrappage bandwagon.
“Ford is the market leader, and we would expect other manufacturers to follow suit further down the line,” says Mike Allen, lead analyst at Zeus Capital.
Ford’s offer is also more wide ranging than those of its rivals, suggesting the company’s stated focus on air quality is only one of the factors driving its decision.
BMW and Mercedes-Benz have both launched trade-in schemes for old diesel vehicles in the UK, replacing them with hybrids or electric models, at least partly in response to negative publicity back in Germany where they are facing allegations, alongside VW, that they colluded over diesel technology.
Ford’s scheme extends to older petrol models as well, and is not limited to Ford-branded vehicles. The company says it will trash any pre-2009 cars that motorists bring to it.
Older diesel cars, which produce nitrogen oxide gases (NOx), contribute directly to poor air quality, while older petrol models emit more CO2, which is linked to climate change, as well as hydrocarbon particles that combine with NOx gases to form poisonous roadside fumes.
Ford says there are 19.3m such pre-2009 vehicles in service, and getting them off the roads will reduce the CO2 by 15m tons a year, equivalent to the annual output of approximately three coal-fired power stations.