Comment: As the end of the scrappage scheme draws near, what comes next?

With the goverment’s scrappage scheme due to finish by the end of March (or as is even more likely - sometime slightly before, if the maximum number of orders is reached), it it inevitable that pretty soon the car industry will have to revert back to the much higher pre-scrappage prices that were being charged prior to the scheme.

Though one or two companies (such as Toyota and Vauxhall) will continue to offer some sort of scrappage offer of their own afterwards, the majority of the 37 participating manufacturers will be reverting to their standard pricing - which begs the question, just what kind of sales figures can be expected for the spring quarter, and then into the summer, as consumers are suddenly faced with far higher (and more prohibitive) prices?

Certain companies in particular have enjoyed massive success with the scheme - Ford and Hyandai being the two frontrunners, and indeed on the whole it has been massively successful as a way of keeping people buying new cars, safeguarding at least some manufacturing jobs and marginally reducing CO2 emissions by encouraging the use of smaller (and more efficient) cars.

However, there was always the risk that the scheme would create a slightly problematic period of market transition once it ended (which nonetheless was preferable for everyone when compared with immediate and much more drastic consequences to the market faced with crumbling demand a year ago) - and it will be interesting to see how manufacturers, and consumers, react to these changes.

I expect the used car market will once more see a surge in demand (after the slight drop off seen as a result of the scrappage offer), but beyond that it remains a tough call to judge what the manufacturers are likely to do, especially if demand for new cars curtails significantly over coming months. As always, we’ll keep you posted.

Dejan Levi

Dejan Levi, Ford, Hyandai, Scrappage scheme, Toyota, Vauxhall