Politicians have a long and proud history of quoting skewed statistics as a way of justifying their latest programs and initiatives. Never has this tactic been more transparent than in the case of the scrappage scheme.
If you have somehow missed it, the so-called scrappage scheme was introduced in May of 2009 as a last-ditch effort to rescue the ailing auto industry from record declines. The program itself gave consumers the once in a lifetime opportunity to trade in their old cars for a 2000 pound credit toward the purchase of a new vehicle.
The program was an immediate hit and led to a thirty percent increase in sales of new cars over the course of the year. However, by the end of the year the scrappage scheme was clearly running out of steam as the country braced itself for an increase in the VAT tax. Even so, cars and trucks and even the Sterling caravan have seen a bump in sales over the past few months.
How far will sales fall? It's difficult to say. But what we do know is that most economists expect the VAT tax to go from 17.5% to 20% in the next few months. Historically, such increases have had dramatic effects on car sales in the UK.
Another seldom aired but widely held opinion is that the scrappage scheme has been a failure. Yes, it did increase car sales, but the initial sales projections were not met, which is why the government has had to extend the program several times.