Arguably, one of the best decisions made by the Irish government in recent months was the introduction of the car Scrappage Scheme in Budget 2010. The scheme should ignite consumer demand and breathe life into a flagging motor industry. Specifically designed to help motor dealers reduce their growing stock of second hand cars, the initiative has also given consumers greater financial freedom to buy a new car.
The scheme works on the premise that the buyer can purchase a new car with a government discount while the seller receives a more competitive VAT profit margin. To date, the initiative has yet to significantly impact on the motor industry. The latest sales figures released indicate that people are still apprehensive about spending.
According to the Central Statistics Office, the total number of all vehicles licensed in January 2010 was 15,595 compared with 19,341 in the corresponding month last year - a decrease of 19.4%. Poor weather conditions in the New Year are likely to have hampered sales.
If you’re considering availing of the scrappage scheme but are unsure of how it works, the following information may be useful…
What is the Car Scrappage Scheme?
Owners of cars of 10 years or older can receive a €1,500 reduction in Vehicle Registration Tax (VRT) on the purchase of a new low-emissions car when an applicable car is traded in against it.
How long does the scheme last?
The scheme came into effect on the 1st of January 2010. It will run until December 31st 2010.
What conditions apply?
As with most government schemes, certain conditions apply:
- The VRT relief will only apply to the purchase of a new car with CO2 emissions of 140g/km or less
- Used cars must have been registered to the owner for at least 18 months
- The car must be 10 years or more from the date of first registration and must be scrapped 60 days before or after the new car is registered
- The car must have a valid NCT or one that expired less than 90 days before being scrapped. However, the scheme will still apply to cars that failed the NCT test within the previous six months.
- The car must have been insured for at least 12 months in the 18 months prior to being scrapped.
The scheme certainly provides a great money saving opportunity for consumers. For prospective buyers wishing to purchase a small car, the €1,500 rebate will represent a substantial saving. Be warned that a high inventory of used cars still line forecourts across the country, as a result be prepared to haggle with your dealer. As always, shopping around is essential to identify and guarantee great value.
Some people argue that car buying reflects consumer confidence since people must feel financially secure before they make any significant purchase. Given last months poor car sales, one could argue that consumer sentiment remains stagnant. We need to regain our confidence and our purchasing power. As previously mentioned, the scheme expires on the 31st of December 2010. If you’re in the financial position to do so, avail of the current window of opportunity and get the best motor for the best price.
Tags: finance tips, government, Transport
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