Scrappage program
A scrappage program is a government incentive program to promote the replacement of old vehicles with modern vehicles. Scrappage programs generally have the dual aim of stimulating the automobile industry and removing inefficient, more polluting vehicles from the road. Many European countries introduced large-scale scrappage programs as an economic stimulus to increase market demand in the industrial sector during the global recession that began in 2008.
Scrappage programs were touted with different names, mostly referring to an environmental benefit. The Vehicle Efficiency Incentive in Canada was based on fuel efficiency of cars. In Romania, this program was called "Rabla", and was launched by Dacia in 2000. In Germany, the economic stimulus program was called "Umweltprämie" and in Austria "Ökoprämie" while most of the public referred to it simply as "Abwrackprämie". Other countries have not tried to connect the program title with an environment aspect – still the Italian "Incentivi alla rottamazione" and French "" require the new car to meet modern emission standards. The German scrappage incentive scheme and the British scrappage scheme do not have such requirements, and the UK scheme was openly sketched on the target to provide financial support to the struggling motor industry. Similarly, the United States Congress devised a scrappage scheme, commonly referred to as "cash for clunkers," as part of a general Automotive Stimulus package series; however, the voucher is only given when the newer car has a better fuel efficiency compared to the old car.
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.
Other programs with the same goal of stimulating industry and increasing efficiency include the Cash for Caulkers plan to promote replacing old refrigerators, air conditioners, etc. with newer, more efficient appliances.
Approaches by country
Austria
The scrappage scheme in Austria was introduced on 1 April 2009, and it allowed customers a grant in cash of €1,500 if the car was older than thirteen years and the new car would meet the Euro-4 emission criteria. There was a limit of 30,000 cars up until December 2009.Canada
The Retire Your Ride program, administered by the Canadian Government, allows Canadian residents to trade in a vehicle manufactured in 1995 or earlier for a wide range of rewards, such as: a public transit pass or C$300.China
In June 2009, a nationwide scrappage program was implemented, which offered rebates of $450–$900 for trading in older, heavy polluting cars and trucks for new ones until 31 May 2010. The program was expected to substitute 2,700,000 more polluting vehicles from the roads.Eligible vehicles included: used minivans, small and mid-size trucks and other mid-size passenger cars that no longer meet the emissions standards set by the Chinese Government. In addition, the Shanghai local government offered similar incentives of $450 to $1,100 per vehicle to its residents who traded in older vehicles; allowing the total subsidy to be as much as $2,000.
After meeting with little success in the first few months, the government raised the compensation to 5,000–18,000 Yuan, or about US$732-US$2,632, for each qualified vehicle at the end of 2009. In June 2010, it was announced that the program would be extended until the end of 2010.
France
The scrappage scheme in France was introduced on 19 January 2009, where the old car would need to be older than ten years and the new car would have needed to meet a particular CO2 emission standard – it started with €1,000 for a car with less than 160 g/km. This was added up for even better emission standards and a "super-bonus" for the scrappage of the old car.French car manufacturers are availing of this scheme for new car purchases in Ireland as well, so Irish customers that purchase new French cars can avail of a grant from both the French Government and Irish Governments.
The program was replaced by a new program called « » in 2017 which broaden grant eligibility to used cars. It requires cars to emit less than 130g/km of.
Germany
The 2009 scrappage scheme of Germany has been the largest so far, being a part of the 2009 stabilization policy "Konjunkturpaket II". Following the 2008–2010 automotive industry crisis, with the 2009 German federal election planned for 27 September 2009, every private person that has been owner for at least one year of a car that was at least nine years old was entitled for a scrappage premium of €2,500, colloquially called "Abwrackprämie" when buying a new car that was compliant to vehicle emission standard "Euro 4". The old cars, supposedly worth less than €2,500, had to be demolished, rather than exported to other countries where they would continue to pollute, with the original papers sent in with the application.When launched on 13 January 2009, the program was limited to at most 600,000 cars and a budget of €1,500,000,000. However, the car market boomed with an unexpected increase of 40% in sales making the program too short running to offer more than a short-term stimulus – estimates showed that the program fund would be depleted by May. In March, a German think tank estimated that the net impact of the program on the German budget will be €2,500,000,000. On 25 March 2009, the German Government decided to continue the scrappage scheme until the end of year, earmarking €5,000,000,000. This amount lasted only until September 2, the program was discontinued accordingly.
The impact on automakers has been varied. Ford has benefited from high sales of the Fiesta which was made in Cologne, plus the imports Ka and Fusion — together up 56% in April 2009 from a year before. However, those who can afford the luxury German models of BMW, Mercedes-Benz, and Porsche with prices over €50,000 have had little benefit from only €2,500, unlike customers of cheaper, smaller cars.
German authorities discovered an illicit scheme through which an estimated 50,000 supposedly scrapped vehicles had been exported to Africa and Eastern Europe. In contrast with the U.S. Cash for Clunkers Program which requires dealers to destroy old engines by draining the motor oil and injecting instead sodium silicate, the German program only required the scrapped vehicles to be sent to junkyards, with papers that are easy to falsify, thus "allowing" the illegal exports to occur.
Italy
In Italy there was a scrappage scheme from 1 January 2007 to 31 December 2008, that allowed for €700 plus a tax rebate. A new scrappage scheme was put in place in 2009. New cars must comply at minimum with Euro 4 + emit a maximum of 130 g/km or 140 g/km of. TheScrapping incentive for cars was €1,500 but could be combined with purchase incentive of €1,500 for a new car running on CNG, electricity or hydrogen. The purchase incentive for a new car running on LPG is €1,500, increased to €2,000 if the car emits less than 120 g/km. This could also be combined with the scrapping incentive. The scrappage program ended in December 2009 with delivery of vehicles completed by March 2010.
Ireland
The Republic of Ireland introduced a scrappage scheme for a second time on 10 December 2009 which offered €1,500 for cars ten years or older. The discount was on the Vehicle Registration Tax and could only be used on cars that had emissions that did not exceed 140g/km. In 2010, the scheme value was reduced to €1,250 per scrapped car and the end date for the scheme was set for 30 June 2011. The first-ever scrappage scheme ran in the early-1990s.India
The government of India in Union Budget 2021, has introduced Voluntary Vehicle Scrappage Policy to eliminate the inefficient and polluting vehicles. According to the policy, private vehicles above 20 years and commercial vehicles above 15 years will have to undergo fitness test at authorized fitness center. Only those vehicles are that are deemed to be fit will be allowed to run, and rest will be sent in vehicle scrap yard. The government has also planning to introduce "Green Tax" under which transport vehicles older than 8 years will be charged a Green Tax at the time of renewal of fitness certificate, at the rate of 10–25% of road tax.Earlier entrepreneurs were reluctant to enter vehicle scrappage business in India, but with the formal introduction of vehicle scrappage policy, automobile recycling industry in India will get giant boost.
Apart from the voluntary vehicle scrappage policy, India also has a mandatory vehicle scrappage policy which is applicable in National capital region, where in any diesel vehicle older then 10yr and patrol vehicles older then 15yr can not ply in the region.