Re: Scrappage scheme - price of newish 2nd-hand cars to fall?

Pauli gurgled happily, sounding much like they were saying:

No.

Don't forget that the car being traded in has to have been owned for 12mo at the time of placing the order - and the scheme closes next March or when the money runs out, whichever is sooner.

So if you haven't already owned that

And you reckon there are too few of these sorts of customer to make a difference in the market for newish 2nd-hand cars in the next year?

Most people with a nine year old car to trade/sell bought it at around

6 years old. They have a budget around £2-4K and an extra £2K off isn't going to make a new car a possibility unless they push the boat out and spend/get credit for an extra £3-4K. For that extra money they get a GM/Chevy 1.0L small hatch and not the 1.6/2L family car they need.

It's not going to affect fleet/ rental markets at all. Rental get changed at around 6/12 months and fleet at 3 years so they don't have

9 year old cars to trade.

For upmarket cars. Again the UK ownership cycle of about 3 years means very few have those 9 year old cars to trade. There may be a few who have an old car in the family that might be willing buy a new car in their wife/son/daughters name and thus trade that old car.

Pauli gurgled happily, sounding much like they were saying:

The shrinkage in the new car market as a whole is going to have - is ALREADY having - a far bigger effect. This ain't going to reverse that effect. It's a nice headline that won't translate into any actual numbers.

Totally agree, this scheme will affect very few. Most of those who buy new won't have a 10yr old car to trade in, (and could probably negotiate at least that amount of discount anyway). Most of those who have a 10yr old car still won't buy a brand new one just because there is an extra grand off. The price difference between even a 1yr old car and a new car is usually far more than a grand.

Z

Peter Hill wrote: There may be a few who

It is presumably possible to find someone just about to purchase a new showroom car, offer to do the purchase deal for them profitably trading in an old owned car, and after the sale reregistering the new car in the name of that someone...

I was wondering about this, too. So, how does it work precisely?

You want a new Mundano and I have an old but serviceable car. We get together to make the most of the scrappage scheme. So I trade my old car in for scrap and get 2k off the Mundano. The Mundano has to be sold to me, but does it have to be registered in my name? Probably it does, so the first problem is that your new Mundano now has two owners on the V5.

Then you have to pay for the car. Who do you pay? Me, and I pay the garage, or do you pay the garage direct? What about finance? Whose name is that in?

It's all getting rather complicated, given that the discount on the new car is going to be reduced by 1k, so it's only the 1k from the govt that we have to play with.

It's only got as complicated as you've said because you're trying to defraud the scheme.

I own a 10 year old car. I go to showroom, buy one under the scrappage scheme and get £2k off the listed price, handing over my 10 year old car when I pick up the new one.

Nothing complicated in that.

Conor gurgled happily, sounding much like they were saying:

I do idly wonder exactly what kind of difference in "cost-to-change" there's going to be between handover under this and flogging the 10yo car privately and walking in as a cash-no-trade-in buyer.

After all, the dealer has to manage the trade-in and the scrapping to get that grand from the government. Call it a couple of hundred quid held back from their best possible deal for the hassle. The grand from the manufacturer's going to be on the table anyway.

So that's about £800 extra on the table. How much would you get for flogging the old car privately? A grand?

So you'd be ahead by ignoring this scheme.

Extremely wise words indeed. I'd also like to throw into the pot the old "Minimum £1500 trade in on your old car" that's been going on for donkeys years. By clever price manipulation and kickbacks from finance companies, that £1500 "cost" to the retailer is no cost at all.

I was commenting on Adrian C's suggestion, actually.

Anyway, talking about fraud, the way this will be done is that some old wrecks that have been off the road a long time will miraculously get MOT certificates then get cmpressed into a 1 foot cube within minutes (if not before), so there's no evidence. There must be scrap yards with thousands of cars in that can suddenly get MOT certificates. There may even be 300,000 wrecks waiting to be resurrected briefly.

"GB" gurgled happily, sounding much like they were saying:

Ain't going to happen.

Who's going to "test" these cars, and risk being struck off as a tester?

What about the "registered for 12 months" requirement?

Uh-huh.

When I bought my wife's new car I got £3K off the list price jsut by saying "I'll buy it if you knock off £3K and throw in car mats, rubbing strips and that diamond coating thing." So I can't see that the headline grabbing crap means much.

As I said, no evidence. The perfect crime!

Registered on the road or SORN. So, if the scrap yard has been SORNing these cars when it takes them in....

"GB" gurgled happily, sounding much like they were saying:

Not quite that simple... You might like to do a bit of research on how MOTs are run.

The car has to be logged onto the computer at the start of the test, and off at the end. There's a minimum time slot. If a VOSA inspector turns up, and the car that's logged on isn't on the ramp or (at best) in the yard, he's going to need one DAMN good reason.

You're getting "registered keeper" and "taxed" confused. The trade-in has to have been registered in the name of the buyer of the new car for 12mo at the date of ordering the new car. It has to be MOTd, they're not bothered if it's taxed or SORNed.

Oh well, maybe, but for 300,000 x 2,000, a few corners will be cut. :)

What I meant was that the wreck needs to have been owned by the yard (as shown on the DVLA 'puter) for at least 12 months. So, if the yard has been getting wrecks in and SORNing them, the wrecks may satisfy all the requirements of the new scheme - apart from that minor problem of the MOT. I'm not sure what yards usually do with wrecks when they get them in. I imagine they usually do something other than SORN, to indicate that the wreck is finally off the road, but I doubt it's essential for them to do that.

Seller HAS to have trader/insurer/dismantler fill in section 9 of the log book and any car that's registered to the trade won't be getting the scrappage deal. Due to 12 month rule they can't just up and register the car to a private owner. As they don't own functional crystal balls and couldn't foresee this, they haven't been deviating from the law on how they hold registration or declare cars scrap.

... and the fact that the yard would have to buy the new car to qualify. Are wrecks usually registered in the name of the proprietor of the yard, or in the business name?

Anyway, this isn't a big fraud in the grand scheme of things. Let's guess there are 24million cars on the road, and 25% of these are >10 years old. That's 6M cars. 300,000 scrapped is only going to make a 5% dent in that. So it's not really about getting dirty cars off the road, it's about stimulating the motor industry in a targeted way. It'll help that a bit... probably selling the cars that are sitting around airfields at the moment.

The crunch time will come if they extend it under the same terms, because after March 2010 it'll cover people who buy a banger today in the hope that they can scrap it in 12 months time. Perhaps they'll just set the ownership date to be from before March 2009 or whatever.

Theo

Neither. They're notified as scrapped or sold to trade, neither of which changes the name or adds a keeper on the V5.