‘Clunkers’ and ‘Scrappers’ – what’s the cost and who’ll pay?
Only a few days into August and news from the automotive sector on both sides of the pond is positive. Last month’s registrations were up to 4.5% higher than the same period last year due entirely to the scrappage scheme here in the UK and the ‘cash for clunkers’ scheme in the US.
There are some caveats, however. In the US, the scheme ran out of money at the end of last month and dealers have yet to find out if the vehicles they have sold using the extra cash incentive in the first week of this month will actually be reimbursed ahead of a vote to approve an additional $2 billion of funding to the scheme, leaving a large number of gung-ho car dealers financially exposed.
The UK scheme is supposed to run until March 2010… as long as the designated fund holds out for that long. Despite the fact that initial survey results from drivers were somewhat negative (they wanted more money!), the sales figures indicate that greed has its limits and registrations here in the UK were also up on the time last year, despite the fact that the big changeover month is usually September.
So, on both sides of the pond, we are getting our tax contribution back in small measure. Or, at least, the privileged few are, since we are not all in a position to trade up, whatever the incentive, and this will very likely have an additional negative impact on election decisions come next year.
What is also of concern is that, for example, US media laud the fact that some of the new vehicles being purchased are hybrids which (over there, mind) can achieve as much as 32mpg – we have cars over here that will do double that without the dubious benefits of hybrid technology (the Prius v Humvee lifecycle cost argument has been covered here on more than one occasion!).
There are cars in this country that are over 10 years old that will still do over 30mpg, if driven conscientiously, so what the scrappage scheme actually does is merely increase, measurably and substantially, the amount of carbon resource we deplete at a time when we need to conserve our use of it and combine it with sustainable alternatives to create a business model that will last.
So who will pay for these schemes? We will, of course - directly and indirectly.
On both sides of the pond, the car registrations are treated second only to the housing market as an indicator of recovery and growth by those who seek our votes. When the pot runs dry, they’ll have to top it up, with our money, to maintain the momentum through to election day.
And whilst we all continue to buy new (when continuing to drive your older, as long as it is properly maintained, car is actually more environmentally friendly), we burn more carbon in the manufacture of neolithic (read: combustion engine) technology, leading to the indirect cost later down the road, when our reliance on fossil-fuel built and powered transportation will inevitably lead to rising petrol prices as the commodity becomes scarcer.
And all the while, the car giants are laughing all the way to the bank. They were bailed out of bankruptcy with your money, they got more of your money to ‘develop’ greener cars and they now get your money for selling you a car, whose trade-in does not need to be checked, serviced or MOT’d, so lowering their cost of sale even further.
You couldn’t make it up!
