As part of Budget announcement last week, owners of vehicles over ten years old will be able to claim a £2000 cash incentive to trade in their car for a new one.
In order to be eligible for the scheme, the driver must have owned the vehicle for at least 12 months. Experian’s analysis of over 34.7 million vehicles currently on the UK roads has found that 7.1 million privately owned used vehicles will be eligible for the scheme.
However, the company’s analysis shows that not all the owners of these vehicles would be in a position to take advantage of the scheme as there are number of other factors to consider.
Approximately 15 per cent of these eligible vehicles are likely to be worth more than £2000, so from a financial perspective the scheme would not be worthwhile for the owners of these vehicles.
Furthermore, a number of people will still look for an older model, despite £2000 towards the total price of a new car. Each year, around 26 per cent of all the used cars sold are over 10 years old. This equates to approximately two million cars, which is almost equal to the total number of new cars sold last year (2.1 million).
By applying Mosaic Automotive, Experian’s consumer classification of vehicle ownership, to the 7.1 million vehicles eligible for the scheme, the company’s analysis shows that the owners of 1.5 million vehicles have the greatest propensity to take advantage of the scrappage incentive, due to their car ownership characteristics.
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Kirk Fletcher, Managing Director of Experian’s Business Information and Automotive division, said: “As our data insight shows, there is well-defined segment of the car owning population in an excellent position to benefit from the scrappage scheme. This scheme should help stimulate demand across the car market, as well as assist the environment by removing older, potentially more polluting vehicles from UK roads. However, we may see a very short term lull in both new and used car sales as some people possibly delay purchases in order to get clarification on whether they qualify for the scheme or not. ”
