Warning over scrappage price loss

The Government's car-scrappage scheme may not make a major difference in car sales, research has found.

A study by price comparison company uSwitch.com shows that the "cash for bangers" scheme, which as of Monday offers a £2,000 incentive to trade old cars for newer models, will be wiped out in just 88 days due to vehicle depreciation.

The firm predicts that new cars bought under the scheme may lose as much as £12.5 billion in depreciation after just a year, while the value of top 10 most popular new cars may decline by 49% and the the top-selling Ford Focus Style's value may drop by 51%.

Motorists should carefully go through their car insurance policies as the write-off value varies substantially between policies, the firm said.

Mark Monteiro, of uSwitch.com, said: "The Government's car-scrappage scheme has been introduced to give the ailing motor industry a much needed shot in the arm by enticing motorists to participate with a £2,000 incentive.

However, he added, the consumer incentive cannot hold weight against rising depreciation. Therefore, it would be better if motorists check the depreciation rate of their desired vehicles before they buy.

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