Carmakers look forward to a happy, scrappy new year

The car scrappage scheme will kick off on January 1st. PADDY COMYNlooks at how you can qualify

THE GOVERNMENT-backed car scrappage scheme for cars of 10 years or older starts on January 1st. It gives a €1,500 cut in Vehicle Registration Tax (VRT) on the purchase of car from Band A or B with CO2 emissions of less than 140g/km when a suitable car is traded in against it.

Similar schemes have worked well in other countries such as the UK and Germany. In Europe new car sales rose by 26.6 per cent in November, compared to a drop of 25.8 per cent in the same month last year.

The scheme has some conditions but most are straightforward. The car must have been registered in the State – in the name of the registered owner of the new car – for at least 18 months before the scrappage date and must be over 10 years old or more. The car must be scrapped within 60 days of the new car being registered or 60 days before the date of the new car being registered.

The car being scrapped must have a valid NCT certificate or one that has expired no more than 90 days before the scrappage date. Cars that fail an NCT in the six months before scrappage can also apply.

The car must have been insured for road use for at least 12 of 18 months before the scrappage date. Cars imported from the UK privately must have been registered for at least 18 months before scrappage.

Such rules stop people buying a car for €50 and scrapping it. It must have been registered in your name for at least 18 months. This also applies to spouses. If a wife is the registered owner of a 10-year-old car, only she can get the discount against a new car and must register the new one in her name.

All cars must be scrapped at an End of Life Vehicles Authorised Treatment Facility and the dealer will do this for you if you authorise them to.

The choice of cars under the scheme is diverse and is not limited to small cars. Because it is based on emissions of less than 140g/km, it will include cars as small as the Toyota iQ, but versions of cars such as the BMW 316d, Audi TT diesel and Mercedes-Benz E200 CDi also qualify by virtue of low emissions.

The VRT reduction is up to €1,500, but in some cases is less than that if the VRT is low. For example, the VRT on a Kia Picanto is €1,200 so this is the reduction. There is also scrappage on hybrid vehicles in addition to the €2,500 allowed on such cars. In the case of the Prius, the total VRT is €3,700, but with the allowance given to hybrids of €2,500 off the VRT, this VRT drops to €1,200. As this is all that remains in terms of VRT on the Prius, this is its scrappage allowance under the scheme. This means that the price of €25,995 for the Prius (which includes the hybrid allowance) drops to €24,795 when a 10-year-old car is scrapped against it.

Many manufacturers are also offering further reductions. Ford has €1,500 extra off its Ka and Renault, in some cases, will add €3,100 to the Government allowance.

“We were the first to come up with a scrappage scheme back in September and the customers have responded to this, but many were waiting until the Budget so they could plan their own household budgets. Since the announcement of a Government scheme we have seen a big increase in the hits to our scrappage website and in enquiries,” says Julien LeLorrain of Renault Ireland. “Since the Budget we have seen our competitors be very aggressive with their pricing so we may have to be very proactive again.”

So what is the likely impact of the scheme on cars sales and how have some of the industries leaders reacted to it?

Paul Willis, managing director of Volkswagen Group Ireland, expects the scheme to increase new car sales in 2010 by 10,000. “The introduction of the scheme is great and I’d like to say ‘well done’ to the government for bringing it in. After we reduced our prices across our brands we were already starting to see an increase in orders.”

This is a sentiment echoed by Eddie Murphy of Ford Ireland. “We could see about 5,000- 10,000 extra cars sold in 2010 as a result, and it also might give people permission to buy as there were many who thought it was bad to be seen to buy a new car in 2009.”