Scrappage allowance catching on

The scrappage allowance devised by Germany's Chancellor Merkel is being adopted by other governments. In order to help out their ailing auto industry, the UK government are planning to introduce a similar scheme amounting to £2,000 for every owner willing to scrap a vehicle that is older than nine years. Details of the British allowance have still to be hammered out between the Secretary of State for Trade and Industry and the Chancellor of the Exchequer, but it is quite apparent that they will be using the German scheme as a model. The British Society of Motor Manufacturers and Traders made it known that £2,000 would be the minimum amount sufficient to give an effective boost to the industry. The SMMT estimates the costs for the first twelve months the system is in place at around £160 million.

Last week, the United States also expressed an interest in this successful idea from Europe: in a dramatic address to the automotive sector, President Obama praised the recycling allowance as exemplary and pledged to introduce a version tailored to US needs. However, Obama will have to set aside a significantly larger sum in his budget than the UK, as there are well over 250 million cars and trucks on American roads. Of these, at least 30 percent are older than 15 years, which makes 75 million owners eligible for a handout.