Scrappage program

A scrappage program is a government budget program to promote the replacement of old vehicles with modern vehicles. In the 1990s many countries had introduced tax rebate programs for new cars that meet a modern emission standard but with the Kyoto Protocol some countries made the public offer dependent on the scrappage of old cars. Based on the pressure of the financial crisis of 2007–2009 many European countries have introduced large-scale scrappage programs as an economic stimulus to increase market demand in the industrial sector.

Scrappage programs were touted with different names, mostly referring to an environmental benefit. The Vehicle Efficiency Incentive in Canada 2007 was based on fuel-efficiency of cars. In Germany the economic stimulus program was called "Umweltprämie" (environment premium) and in Austria "Ökoprämie" (eco premium) while most of the public referred to it simply as "Abwrackprämie" (scrappage premium). Other countries have not tried to connect the program title with an environment aspect - still the Italian "Incentivi alla rottamazione" (scrappage incentives) and French "Prime à la casse" (scrappage premium) require the new car to meet modern emission standards. The German program just as the British scrappage scheme do not have such requirements under the assumption that new cars meet modern environment criteria anyway - low emission has been a compulsory feature for years and consumers tend to buy cars with a good fuel efficiency for their personal economic benefit. Economist Willem Buiter questions environmental benefits of the program.

Different scrappage schemes

Germany

The scrappage scheme of Germany has been the most costly so far. Every owner of a car being older than 9 years was entitled for a scrappage premium of 2,500 euros when buying a new car. When introduced on January 14, 2009, the program was limited to at most 600,000 cars and a budget of 1.5 billion euros. However the car market boomed with an unexpected increase of 40% (March 2009 compared to March 2008) in sales making the program too short running to offer more than a short termed stimulus - estimates showed that the program fund would be used up by May. On March 25, 2009, the government decided to continue the scrappage scheme at least until the end of year. Estimates go for about 5 billion Euros backing sales of 2 million cars. As an economic stimulus it is considered effective as per 2,500 euros of public money it activated on average 7,500 euros of private money.

France

The scrappage scheme of France was introduced on January 19, 2009 - the old car would need to be older than 10 years and the new car would need to be meet a particular CO₂ emission standard of - it starts with 1000 EUR for a car with less than 160 g/km. This is added up for even better emission standards (5000 EUR for cars with less than 60 g/km - effectively one electric vehicles) and a "super-bonus" for the scrappage of the old car.

United Kingdom

The United Kingdom has introduced a scrappage incentive scheme in the 2009 United Kingdom Budget. Scrapping of an old car would allow for a £2,000 cash incentive - the money burden is shared with £1,000 funded by the government and £1,000 funded by the automobile industry. The program is limited to £300 million allowing for about 300,000 customers to benefit.

Italy

In Italy there was scrappage scheme from January 1, 2007, to December 31, 2008, that allowed for 700 euros plus a tax rebate. A new scrappage scheme is still being discussed with plans for 1,500–5,000 euros on cars being older than 10 years and the new car to reach a level of less that 140 g/km.

Spain

In Spain there is a scrappage scheme with a special credit scheme for a new car to reach a level of less that 140 g/km. It allows a low interest credit up to 30,000 euros if the old car was more 10 years.

Portugal

Portugal has increased a scrappage scheme allowing 1,000 euros for a car being older than 10 years and 2,000 euros for a car being older 15 years if the car is being recycled and the new car has an emission standard of CO₂ < 140 g/km.

Austria

The scrappage scheme in Austria was introduced on April 1, 2009, and it allows customers for 1,500 euro cash if the car was older than 13 years and the new car would meet the Euro-4 emission criteria. There is a limit of 30,000 cars up to December 2009.

Romania

In Romania a scrappage scheme was introduced that allows for 790 euros scrappage scheme on cars older than 12 years. There is no emission restriction of the new car to be bought.

Slovakia

In Slovakia a scrappage scheme was introduced that allows for 2,000 (originally 2,500) euros if the old car was older than 10 years and the new car was below 25,000 euros.

Luxembourg

In Luxemburg a scrappage scheme was introduced in January 2009 that allows for a premium if the old car was older than 10 years and the new car to meet CO₂ < 150 g/km (1,500 euros) or CO₂ < 120 g/km (2,500 euros).

The Netherlands

In Den Haag in the Netherlands a scrappage premium of 1,000 euros is given for cars older produced prior to 1991.

See also

• European emission standards
• 2008 European Union stimulus plan