Used car market heavily impacted by scrappage scheme

New research has found that the used car market has been heavily impacted by the government's car scrappage scheme, with used car sales dropping to their lowest level in almost a decade.

A report from credit rating agency Experian shows that 6.8 million used cars were sold in 2009, a drop of 5.7 per cent on 2008. This represents the lowest number of used cars sold per annum since the 6.71 million sold in 2000.

The sales of small cars and those under three years old were particularly impacted by the government scheme, reports The Telegraph. The scrappage scheme offered drivers a £2,000 discount on 400,000 new cars and aimed to improve the prospects of the car industry during difficult financial times.

The initiative essentially restricted the number of old cars for sale. This then inflated prices, as cars were scrapped under the scheme rather than offered for sale. Car owners hoping to still take part in the scheme have been advised to compare car insurance policies, as premiums for old cars could also be affected by the changing market.

According to The Telegraph, Kirk Fletcher, managing director for Experian Business Information and Automotive, said that both the recession and the scrappage scheme have had a big impact on the used car market.

However, the final stage of the car scrappage scheme - which has been hailed as a success - is currently rolling out.

Mr Fletcher added: "The scrappage scheme is coming to an end, but value for money will remain at the forefront of consumer's minds, which means that they could relax their criteria and seek out older, lower priced vehicles."

Fri, 12 Mar 2010 02:01:00 GMT