Saturday, September 5, 2009

Car scrappage programs are bad for the classic car scene

We all are aware of the financial crisis and we all see how bad it is. To improve the situation a number of states created car scrappage programs under a series of names, i.e. "cash for clunkers", "Abwrackprämie", "Oekoprämie". The concept is pretty much the same: Buy a new car, get your old one destroyed/scrapped and the state will honor this with an amount in the area of USD 1'400 to 7'000, depending on the country. Usually there's some fine print on what old and new cars fit the scheme.
People seem to like this model and bought new cars, the states invested together more than 10 billion USD to subsidize these car sales. So far so good. But there are a number of issues with such an approach:
  1. It's not sustainable, people basically bought a car earlier than they planned to profit from the subsidies. This means the car industry may have an even bigger problem next year.
  2. New cars are not always better for the environment. As I said in earlier blog posts, the production of a car takes a lot of energy and material. Destroying old cars that still could run for another 5 or 10 years can be a bad idea for nature.
  3. Repairing (older) cars is an important business. What will all these car repair shops do if people only drive new cars that need less repair or can only be repaired in the dealer networks?
  4. If you read what cars are destroyed under these programs you will find some that you hoped to see as classic cars soon, for example the Porsche 914, Ford Capri, Volkswagen Beetle, Fiat Panda MK1, Alfasud, etc. to just name a few. As a matter of fact a lot of cars that might have become cherished youngtimers or oldtimers disappeared from the scene.
Of course my worries are specifically with the last point. Let's hope that not too much historically valuable engineering output has been destroyed. And, for once, I am happy that the nicer old cars are way too expensive to be exchanged against a boring new car and a 3'000 USD check.

1 comment:

John L said...

I agree with all of your points and there's another one to consider - think of the people who bought new cars on these schemes and then lose their jobs next year, there'll be an even bigger rise in bad and doubtful debts.