Why a Car Scrappage Scheme?

homer911

If you must drive, the geenest thing you can do with a 10 year old car is to keep driving it. I have 37000 genuine miles on my 9 years and 1 month old car, and I've no intention of changing it next year...

andrewdeerpark

Will not be a success this time, reason finance?

In the old days scrappage, the car dealers rolled loans from a previous car into the new loan and kept doing this when you changed, getting a lump sum cheque from the finance house, a local Nissan dealer in my area was famous for it!

Boom ended you had a worthless car with a large loan hence you defaulted. All changed now with only 5 companies doing car finance.

That said dealer is in serious financial trouble though he still is hanging on to his 15 houses and commercial property interests in an attempt to ride out the downturn with the benifit of NAMA; makes me sick.

This scrappage is a scam do not fall for it!

seamus

Armelodie wrote: »

• 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..
  

Oddly enough, there are some conditions on what will be accepted for scrappage:
- The car must have been registered in Ireland 18 months or more ago; Fair enough, stop people bringing in foreign cars, paying no VRT and getting a VRT rebate.
- The car must have been continually insured for the 12 months before being scrapped; This is obviously to ensure that only cars which have been in use are getting traded on
- The car must have a valid NCT at the time of being scrapped; Which is for the same reason as it having insurance

So basically, they think that people are going to trade in worthwhile, working, insured vehicles to get a huge a loan on a brand new vehicle, which as pointed out by someone else, will drop by more than €1500 in value the second you drive it off the forecourt.

I can see this being a spectacular failure - either because no-one takes it up or because someone finds a loophole and rapes it.

Lord Trollington

Scrappage scheme will run from the 1st January 2010 until 31st December 2010.
VRT Relief of up to €1500 will be available.

The VRT relief will be provided where a new car in category A of emissions Bands A or B (less than 140g/km CO2 Emissions) and an old car is scrapped.

The car being scrapped must have:

Been registered in the state in the name of the new car purchaser for the previous 18 months to the date of the scrappage.

Must be ten years old or more from the date of registration.

Must be scrapped after December 9th 2009.

Must be scrapped within 60 days of the new registration date, provided the date of scrappage is after December 9th 2009.

Must have Valid NCT, or one that has expired no more than 90 days prior to issue of Certificate of Destruction, or documentation to prove that is was presented for Testing and failed within the prior 6 months.

Must have been insured on the road for 12 months of the 18 month period, prior to issue of the Certificate of Destruction.

Being scrapped means being taken to an End of Life vehicle centre (ELV) and an Certificate of destruction is issued in respect of the presented car.

Its pretty straight forward, these are the guidelines.

There is a lot of people posting on the subject here that think they have some sort of understanding of the Motor trade, maybe they drove by a dealership recently or something.
But the amount of Bullsh)t being written is unbelievable.

Gurgle

whycliff wrote: »

The VRT relief will be provided where a new car in category A of emissions Bands A or B (less than 140g/km CO2 Emissions)

That makes a bit more sense.

Lord Trollington

homer911 wrote: »

If you must drive, the geenest thing you can do with a 10 year old car is to keep driving it. I have 37000 genuine miles on my 9 years and 1 month old car, and I've no intention of changing it next year...

Exciting stuff altogether, is it a Micra by any chance. Bullet proof they are, the women love them too!!!

091Brian

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.

That's the only reason they are introducing the Car Scrappage scheme and this is being subsidised by the increase in vat on Petrol and diesel. So the people that can not afford new cars are subsidising the rich to buy new cars, just so the rich car dealers can keep their jobs and make more money.

Also why is Diesel getting a bigger hike than petrol, I thought Diesel was greener? This is the 2nd time in a row diesel has taken a bigger jump. They're putting it up more because they can, because diesel is already a little less expensive!!

VAT on home heating oil is also going up, but VAT on booze is going down. The only reason for that is to try and be more competitive with shoppers going North.

Great self serving government we have!!

Lord Trollington

091Brian wrote: »

That's the only reason they are introducing the Car Scrappage scheme and this is being subsidised by the increase in vat on Petrol and diesel. So the people that can not afford new cars are subsidising the rich to buy new cars, just so the rich car dealers can keep their jobs and make more money!!

What an absolute stupid statement.

The scheme is being funded by giving a VRT relief.
VRT is Vehicle Registration Tax payable on each new car registration in Ireland.
The scrappage scheme is a relief of this tax up to €1500, VRT on some models can be up to €4-5,000 so they are getting €1,500 off this amount.

The government would still be benefiting from the intake of VAT and remaining VRT on vehicles.

The government took in 2007, €2billion from the motor trade, through VAT and VRT reciepts.

This year they will take €500million. I bet the public service workers wouldnt mind the €1.5Billion the Motor trade has dropped coming back to the government books so that they would not have had to take pay cuts.

Not everyone will qualify for a scrappage scheme so it is very limited.
Generally rich people do not drive around in 10 year old + cars.

The people who will avail of the scrappage scheme would not have considered purchasing a new car without the scrappage scheme being introduced.

It will give a booste to the intake of VAT and VRT and also not add anymore people to the Dole Q's.

After all there is 50,000 people employed in the motor trade in Ireland.

Do some research before you come out with brain fart statements.

Lord Trollington

091Brian wrote: »

VAT on home heating oil is also going up, but VAT on booze is going down. The only reason for that is to try and be more competitive with shoppers going North.

Great self serving government we have!!

Another well thought out statement.

Carbon Tax has been introduced on fossil fuels, including coal, heating oil ect ect ect.
These will not come into effect until May 2010 as far as i know.

Regarding Alcohol. 500million has been lost so far to spending up the North.
What do you put forward as a potential solution to stop the flow of shoppers to the North?

seamus

whycliff wrote: »

Regarding Alcohol. 500million has been lost so far to spending up the North.
What do you put forward as a potential solution to stop the flow of shoppers to the North?

Actually 500m is the estimated amount *spent* up North. The actual revenue lost is closer to 100m. Which is about 2.5% of what the Government needed to save yesterday. So wasting a lot of effort on stemming the flow or making drastic changes would have been folly.

The people who will avail of the scrappage scheme would not have considered purchasing a new car without the scrappage scheme being introduced.

But look at the price of new cars. A €1,500 rebate is a piss in the ocean on the cost of even a brand new basic model.

bijapos

The scrappage scheme was only introduced after prolonged lobbying by the car industry. First I remember of it is back in May (Ithink) when Bill Cullen was on Pat Kenny with Dan Boyle and Bill was having a cry about car sales going down. Since this day the SIMI have made a concerted effort to have this scheme introduced. They, like the CIF and IBEC seem to have a direct line to RTE, popping up any time this is mentioned to give their views.

To anyone who is on this forum and is from the SIMI, you've got what you asked for, now <mod>deleted and infracted</mod>

I think in fairness the scheme has obviously had its opponents in government, I know that not all Greens supported it, but it's obviously a concession to someone. The rule that it has to be owned for 18 months will knock a lot of people out of the scheme, and the fact that its only €1500 will make it uninteresting for others. Those who do qualify will be sorted out by the banks, who as we know have got seriously tight on lending. It seems that they have drawn up the rules much stricter than in other countries (usually 6 months ownership and €2500 grant). In that respect its might not be too much of a success.

Regarding it being self financing, it isn't necessarily true. Anyone who buys a car under this scheme and who was thinking of buying a car anyway is costing the state €1500 in missed VRT, money which will be missing a couple of years down the road. The biggest scrappage scheme in the EU was this year in Germany. Interestingly enoough, they have said that it was not a success as they think it has caused an artificial peak of sales, i.e. people who might have bought cars in 2010,2011 or even 2012 were buying them in 2009. I read an interview with the head (or head of sales) of SEAT in Germany who has said that it was at the end not a good thing.

New car sales are like TV sales or any other "luxury" purchase, they go up and down as economies go up and down. It's all part of a market driven economy, the fact that some dealerships are closing doesn't mean that there will be nowhere to buy a car, it is essentially sorting out the weak from the strong, so get over it.

Incidentally, the argument of increased spending reminds me of the parable of the broken window. The idea is that those who have money to spend instead of spending it on a new car, would quite possibly have spent it anyway on other items, holiday, house renovations or smaller purchases such as clothes etc.
The parable describes a shopkeeper whose window is broken by his young son, and who has to pay for a glazier fixing his window. It conveys some thoughts on economy and money circulation. Bastiat's original parable of the broken window went like this:
“Have you ever witnessed the anger of the good shopkeeper, James Goodfellow, when his careless son happened to break a pane of glass? If you have been present at such a scene, you will most assuredly bear witness to the fact, that every one of the spectators, were there even thirty of them, by common consent apparently, offered the unfortunate owner this invariable consolation—"It is an ill wind that blows nobody good. Everybody must live, and what would become of the glaziers if panes of glass were never broken?"
Now, this form of condolence contains an entire theory, which it will be well to show up in this simple case, seeing that it is precisely the same as that which, unhappily, regulates the greater part of our economical institutions.
Suppose it cost six francs to repair the damage, and you say that the accident brings six francs to the glazier's trade—that it encourages that trade to the amount of six francs—I grant it; I have not a word to say against it; you reason justly. The glazier comes, performs his task, receives his six francs, rubs his hands, and, in his heart, blesses the careless child. All this is that which is seen.
But if, on the other hand, you come to the conclusion, as is too often the case, that it is a good thing to break windows, that it causes money to circulate, and that the encouragement of industry in general will be the result of it, you will oblige me to call out, "Stop there! Your theory is confined to that which is seen; it takes no account of that which is not seen."
It is not seen that as our shopkeeper has spent six francs upon one thing, he cannot spend them upon another. It is not seen that if he had not had a window to replace, he would, perhaps, have replaced his old shoes, or added another book to his library. In short, he would have employed his six francs in some way, which this accident has prevented

http://en.wikipedia.org/wiki/Parable_of_the_broken_window

`

Lord Trollington

seamus wrote: »

Actually 500m is the estimated amount *spent* up North. The actual revenue lost is closer to 100m. Which is about 2.5% of what the Government needed to save yesterday. So wasting a lot of effort on stemming the flow or making drastic changes would have been folly.

But look at the price of new cars. A €1,500 rebate is a piss in the ocean on the cost of even a brand new basic model.

Its not wasting a lot of effort, €500million worth of business was lost to the North.
Thats €500 million that could have kept in the Irish economy -keep businesses open, -paying wages, -ensuring employment, -pay for Cervical cancer vaccine, -make more beds available in oue Hospitals the list is endless.
Revenue lost to the govenrment is 100million but to the Irish economy its €500million.

Brand New cars now start from under €10k. up to €1,500 rebate, coupled with dealer discount could be up €2-3k.

Your obvioulsy thinking Higher end stuff, which people trading in 10 year old cars will not be looking at.
Get real.

091Brian

whycliff wrote: »

Another well thought out statement.

Carbon Tax has been introduced on fossil fuels, including coal, heating oil ect ect ect.
These will not come into effect until May 2010 as far as i know.

Regarding Alcohol. 500million has been lost so far to spending up the North.
What do you put forward as a potential solution to stop the flow of shoppers to the North?

Maybe you should think before you speak too!!

Yes, the Carbon tax isn't coming into effect immediately, but it's coming. I agree in principle with the concept of the Carbon Tax, but unless the government is going to give us a viable alternative to heat our houses and power our cars and/or provide a proper mass transit system this is a joke. We'll still need to heat our houses and drive our cars, so the end result is we'll all pay more money in tax!!!!!! But those that can afford to buy new cars will be getting a break. Maybe the scrappage scheme will encourage some people to upgrade their cars and generate some more tax revenue for the State, but as pointed out most rich people don't have 10 year old cars.

As far as the alcohol tax reduction, it will still be cheaper to go North, but just not as cheap as before. Maybe with the reduced savings on booze along with the added cost of petrol, more will buy their booze in the republic.

My point is, all of these measures just hurt and don't help the people that really need help and in fact will make things worse, unless you're an alcoholic with some money and an old car!

Lord Trollington

bijapos wrote: »

To anyone who is on this forum and is from the SIMI, YOU NOW HAVE WHAT YOU F**KING ASKED FOR, NOW F**CK OFF AND LEAVE US ALONE!

Your post lost all credibility after this, shameful post realy.

Its a grown up debate, and you resort to this.

Lord Trollington

091Brian wrote: »

My point is, all of these measures just hurt and don't help the people that really need help and in fact will make things worse, unless you're an alcoholic with some money and an old car!

All of these measures effect me also, i'm not a big drinker but i do own a car, as does my partner and we both travel to work everyday.

You haven't came up with a possible solution?

The government is broke and need revenue. Revenue has to come from somewhere, The public service dont want to contribute, raising taxes further would smother the economy, people arent happy with introducing Carbon Taxes, or reducing Social Welfare, or adding 50cent to a perscription that they are already getting for free.

Some people need to live in the fooking real world here.

The government have no money, where do you think they should or could booste revenue?

seamus

whycliff wrote: »

Brand New cars now start from under €10k. up to €1,500 rebate, coupled with dealer discount could be up €2-3k.

Your obvioulsy thinking Higher end stuff, which people trading in 10 year old cars will not be looking at.
Get real.

A Nissan Micra is €15k new, basic. Is that "higher end" stuff? A Ford Focus Style with no frills is €21k. Is that "higher end" stuff? A 5dr Nissan Micra is about the minimum someone with a family of four needs for runabout duties. If you have more kids or want to do anything more than run to the shops, you'll need something slightly larger such as a Ford Focus or a Nissan Note, which are €21k and €18k respectively.

The majority of people holding onto 10 year old cars aren't just pensioners and teenagers you know.

The cost of vehicles in Ireland is in relative terms, twice as much as the cost of vehicles in the U.S. There are various reasons for this, but my point is that in order to have a scheme that's as successul as the American scheme, the government needs to offer rebates of upto €3,500 on new vehicles, not a piddly €1,500, which is less than 10% of the cost of most new cars.

seamus

In fact, after a quick look on carzone.ie, it would appear that the only vehicle under €10k is the Chevrolet Matiz.

So basically if someone has a car over ten years old and they want to avail of the government scheme without completely breaking the bank, they need to downgrade to a hatchback with a 0.8 litre engine?

Why would anyone do that?

wilson10

whycliff wrote: »

What an absolute stupid statement.

The scheme is being funded by giving a VRT relief.
VRT is Vehicle Registration Tax payable on each new car registration in Ireland.
The scrappage scheme is a relief of this tax up to €1500, VRT on some models can be up to €4-5,000 so they are getting €1,500 off this amount.

The government would still be benefiting from the intake of VAT and remaining VRT on vehicles.

The government took in 2007, €2billion from the motor trade, through VAT and VRT reciepts.

This year they will take €500million. I bet the public service workers
wouldnt mind the €1.5Billion the Motor trade has dropped coming back to the government books so that they would not have had to take pay cuts.

Not everyone will qualify for a scrappage scheme so it is very limited.
Generally rich people do not drive around in 10 year old + cars.

The people who will avail of the scrappage scheme would not have considered purchasing a new car without the scrappage scheme being introduced.

It will give a booste to the intake of VAT and VRT and also not add anymore people to the Dole Q's.

After all there is 50,000 people employed in the motor trade in Ireland.

Do some research before you come out with brain fart statements.

I'm no economist so I'm looking for someone to explain to me in layman's terms how encouraging people to spend money on imported goods, whether they be cars or tins of lager makes economic sense.

At least a lot of the booze is produced here so that's not so bad, but there are no cars made here and to make it worse most of the money for the cars is borrowed.

To my mind the only way we are going to get out of the mess is to export more, whether it be goods or services and keep as much money as possible in the country by importing less.

Am I wrong ?

091Brian

whycliff wrote: »

All of these measures effect me also, i'm not a big drinker but i do own a car, as does my partner and we both travel to work everyday.

You haven't came up with a possible solution?

The government is broke and need revenue. Revenue has to come from somewhere, The public service dont want to contribute, raising taxes further would smother the economy, people arent happy with introducing Carbon Taxes, or reducing Social Welfare, or adding 50cent to a perscription that they are already getting for free.

Some people need to live in the fooking real world here.

The government have no money, where do you think they should or could boost revenue?

The Irish Motor trade is almost as bad as the banks and builders, another group that shouldn't be bailed out. Last year I bought a 1 year old car in the UK, imported it her myself and paid the government their crazy VRT and even though VRT was paid twice - once in the UK by the original owner, again by me, plus the cost of travel, petrol, ferry and hotel, I still saved almost €5,000. Considering this, it's seems apparent that the Irish Motor trade are ripping us off. I know there's no easy solution, but there's a lot better things that could have been done. We have a government that have blown the great opportunities of the Cletic Tiger with greed and now`are punishing the innocent.

SkepticOne

Good post by bijapos imo. The broken window fallacy applies here. We are simply using public money to stimulate debt and economic activity for the sake of it.

Even if it were to be a "success", subsidising imports is hardly the way we're going to get out of this mess.

Typical FF rubbish. Pandering to vested interests at the expense of everyone else.

K-9

Can't see it being of much value either. Even if it does work, its just propping up many car dealers who built showrooms and garages based on a bubble economy, that we'll never see again.

old boy

wilson10 wrote: »

I'm no economist so I'm looking for someone to explain to me in layman's terms how encouraging people to spend money on imported goods, whether they be cars or tins of lager makes economic sense.

At least a lot of the booze is produced here so that's not so bad, but there are no cars made here and to make it worse most of the money for the cars is borrowed.

Am I wrong ?

the nail is hit on the head, the money for new cars has to be borrowed, from who do i hear you asking, yes of course, linehans friends the bankers, how many people have the means to buy a new car after yesterday,

K-9

old boy wrote: »

the nail is hit on the head, the money for new cars has to be borrowed, from who do i hear you asking, yes of course, linehans friends the bankers, how many people have the means to buy a new car after yesterday,

Lennys friends aren't lending though!

091Brian

wilson10 wrote: »

I'm no economist so I'm looking for someone to explain to me in layman's terms how encouraging people to spend money on imported goods, whether they be cars or tins of lager makes economic sense.

At least a lot of the booze is produced here so that's not so bad, but there are no cars made here and to make it worse most of the money for the cars is borrowed.

To my mind the only way we are going to get out of the mess is to export more, whether it be goods or services and keep as much money as possible in the country by importing less.

Am I wrong ?

Great point! One of the big criticisms of Obama's car scrappage scheme was that it wasn't just for American cars and in fact the majority of the cars purchased were Japanese. Unfortunately there are no Irish cars.

ardmacha

the money for new cars has to be borrowed

No it doesn't. Some people don't borrow to buy things that are then parked out on the street.

bijapos

Fair enough Scofflaw, apologies to anyone from the SIMI who was offended by that line in the post.

Lord Trollington

091Brian wrote: »

The Irish Motor trade is almost as bad as the banks and builders, another group that shouldn't be bailed out. Last year I bought a 1 year old car in the UK, imported it her myself and paid the government their crazy VRT and even though VRT was paid twice - once in the UK by the original owner, again by me, plus the cost of travel, petrol, ferry and hotel, I still saved almost €5,000. Considering this, it's seems apparent that the Irish Motor trade are ripping us off. I know there's no easy solution, but there's a lot better things that could have been done. We have a government that have blown the great opportunities of the Cletic Tiger with greed and now`are punishing the innocent.

Its ironic that your on here giving out about the government introducing slahes to everything in front of them, when you consider you bought a car in the UK last year, giving your business and sending your money directly out of the country.
People are more than entitled to do this, its all about free market and choice but dont come on here then talking bullsh*t about the goverment reducing wages in the PS, slashing child benefit, and punishing the innocent when our contributing to it!

The UK do not have VRT, They pay a fee of £55 upon first registration of the vehicle when purchased new.
Again you should do some research before coming out with bullsh*t statements.
VRT is now based on the CO2 emissions of the vehicle, the higher the CO2 emissions the higher the VRT.
Its based upon the percentage of the OMSP- Open market selling price.

It ranges from 14-36% depending on the CO2.

The UK do not have VRT which is what drives up the price of vehicles in Ireland.

Also they do not pay the same VAT rate. At the moment they pay 15% VAT as, in Ireland we pay 21.5% at the moment. Both changing in the new year.

In one city alone, Birmingham, they sell more new cars in that city in one year that we do in the whole of Ireland in the same year.

So when distributors are buying in stock for the Irish market, they are not buying in bulk like they would be in the UK and therefore cannot negotiate a better deal.

All these factors contribute to car prices in Ireland being higher than in the UK, a lot of which are out of the control of dealers.

Do you not think that if dealers could sell cars cheaply and make a profit and a lving out of doing so, they would?

soden12

The SIMI line seems to be that somehow the "Motor Trade" donates loads of money to the Government each year. Guess what lads - its the VRT that us taxpayers pay that goes to the exchequer. Plenty of motor dealers on the revenue defaulters list each year.

This money doesn't magic itself out of nowhere - if people suddenly decide to spend it on cars then some other sector will loose out.

seclachi

I agree, its stupid, a new car is a luxury to anybody now, the second you sit into it you`ve already knocked off a sizeable percentage of its value, and it keeps plummeting. Thinking about the two main beneficences of this it just seems so stupid, one is somebody whos buying a new car, not somebody who is hard up at all, why do they deserve 1500 euro back ? On the other hand you have the garages, who have been hit really hard in fairness, but on each car they sell only a sliver of that money actually stays in Ireland, the rest just goes to the manufacturer & importers. How does it make sense to spend so much on an industry that is going to plummet even more as this recession deepens, would it not be better spent on assistance of some kind for the employees ?

invinciblePRSTV

Just an update via today's Vincent Browne's IT column:

In the first six months of 2010 we bought 61,361 new private cars and imported another 21,712. Of the new private cars bought, 1,566 were BMWs, 232 were Lexus cars, and 1,618 were Mercedes Benzes. If we are all broke, how come 61,361 people can afford new cars? And no change to the political culture.

80k new cars in the state in the first 6 months of this year, this shows that there is still plenty of money sloshing around the economy despite our economic woes. Somehow i doubt that the car scrappage scheme made any impact other then it was a handy subsidy for those who were already buying a new car (or the subsidy allowed for a nice upgrade).

Anyone here buy a new car in 2010 who can definitely say they wouldn't have bought one without the Scrappage Scheme?