Car scrapping scheme proposed for Australia
March 23, 2009 by George Skentzos
Drivers could be offered up to $3000 to scrap their old cars if a proposal made by the Motor Traders Association of New South Wales is accepted by the Federal Labor Government.
The proposal is intended to remove polluting, unsafe cars from Australian roads, with similar initiatives already implemented in France, Germany and Brazil leading to an increase in new vehicle sales by as much as 10 per cent.
The MTA NSW proposal would see the Australian Government pay up to $3000 for vehicles more than 10 years old, with the cash incentive to be put toward a new car purchase to help stimulate the car industry.
These older cars would then be crushed, permanently removing them from Australian roads – with the Government reminded that the cost of this scheme would be largely recuperated through the inherent cost of GST associated with every new car purchase.
“We are not specifying buy Australian or anything else,” MTA NSW’s James McCall said. “We need to help the industry, including 103,000 small businesses that make a living from the car industry and 318,000 workers.”
The MTA estimates that of the 15 million vehicles in Australia, about half are more than 10 years old and a further two million of those worth less than $3000.
“The key is the grant has to be at least equal to what the owner would get if they traded it,” Mr McCall said. “Our submission asks the Government to set aside a maximum of $4.5 billion, spread over three years, which will be plenty to cover the cost.”
While the proposal has upset some used car dealers, the scheme would be more than welcome for the struggling Australian automotive industry, with new vehicle sales hitting a six-year low in February.
Source: News.com.au
Print it: 
Stupid.
What a fantastic idea, as long as the old cars are scrapped and not re birthed somewhere. Lots of benefits for safety, environment and jobs. Here’s hoping.
IHope, you are the one stupid.
This is a brilliant idea which as mentiones, has worked wonders in France and Germany especially. I would definately replace my second car (10+ years old) with this offer…especially that I’m looking for a new car in August/September.
Bring it on KRudd!
I think this is a great idea, but has any thought gone into the fact that people are driving older or unsafe cars because they cannot afford a new car or repairs to their old car…
There goes most of the sales for the wreckers I would guess though ?????????
Now they only need a cash for ex husbands ,I sent mine back and got nothing back ! ;)
This will improve the resales of those old cars dramatically.
Buy 10 $500 cars now and sell them for $1500 or so if this legislation gets passed :D
bahahahaha i dont think the gov would go that far Bavarian Missile
hmmmmm i dont realy think this is the answer tho 3k aint gonna change peoples minds into buyn a new car
but if u did go buy some over 10yr old cars for 500 bucks u could make alot of money here hmmmmmm
The question lee raised about affordability is the very question i come up with every time this subject is touched on.
how can someone who obviously either cant afford a new car or cant see the sense in buying a new car for the obvious waste of money that they are, suddenly be swayed in to trading their $1K bomb for a new one that will see them having to shell out another 18K AT LEAST to get a decent one
I feel sorry for people who’s old car might die on them, and they need a car fast, but can only afford say $2k, well bad luck you can’t get one because the minimum car price will become $3k… this has all the hallmarks of a poorly thought out plan, right up the labor party’s ally then!
The other thing which is always brought up in regards to this subject is that it will only bring tommorrows sales forward to today.
Also say goodbye to used car dealers. noone ever thinks of that part of the industry. That side also has employees that have families too.
sorry, but i can mainly see negatives with this sort of scheme
I agree with the later comments, also throw in the supply demand part as well. The VN that was worth $500 to the wrecker is now worth nothing as no one will need it’s parts and everyone is getting out of them. THe $1000 Au or Wide body has just become $300 because no one wants them. Also they would be looking into finance, so when they lose their job is Govco going to continue paying their loans?
i would take advantage of that for sure!!! i have been looking at buying a new car and have been for 3 years! my old uc torana is not worth a pinch of salt, but that would get me moving!!
Rudd has no ideas…
First free money for looser mums, then $950 for everyone to BUY Made in China Flat Screens. Doing great for our economy.
Elitist, neither has the conservative side of politics.
Level playing field and the extinction of manufacturing in Australia is what both sides support.
All our Captains of Industry know is how to go to China or India and set up there. These idiots should be outsourced to same to complete the picture.
This is such a stupid, short sighted plan. Everyone rabbits on about how sales in Germany are up 20%, in the first month, so we have no idea how well this plan will actually work longer term. Secondly, all those people who replace their car now using this scheme, they would have been people that bought a car in 2 – 3 years time. So in 2 – 3 years time, who is going to buy the new cars? Unless this scheme runs for the car life cycle (around 12-15 years in australia) at some point the increased sales now will come at the cost of future sales, so the car industry gets screwed, again. It also relies on the faulty logic that people who own $3k cars can afford to buy a new car. I’m sure some might, but not enough to really add a sustained increase in sales. Lastly its not ‘green’ at all, the energy required to produce a car will take huge amount of kilometres for a new car to pay itself off, compared to just keeping your old car. Even more lastly, it also means the lowest priced car will be around $3k, because there will be enough people who wanted to buy a new car anyway buying a bomb to get the $3k trade-in. So uni students and other financially impoverished people will find it harder to get their first car. Car prices are like a spring, fixed at one end by the value of scrap cars (ie nothing) but the other end (new car prices) isn’t fixed. So just like the first home buyers grant, if you lift the fixed end up by $3k, then all that actually happens is the non fixed end lifts up $3k. So no one wins, except the car manufacturers, and thats on the governments dime.
“The MTA estimates that of the 15 million vehicles in Australia, about half are more than 10 years old and a further two million of those worth less than $3000.”
omgosh..dint know half the aussie are driving old junks
sounds like india/china/thailand
i think even china has more new cars
hmmm…interesting concept. I tend to agree with Tom. Maybe it should be an option if you want it…dunno? The 3K will probably be gobbled up as Tom explained.
It’s money for nothing. Imagine the last time you sat behind that piece of shit, mid-80’s datsun blowing blue-smoke and filling your lungs before you can shut off the outside air, then it dawdles, only one brake light works and the indicators come on sporadically – now imagine this person getting $3000 to get this bucket off the road! HOW CAN THAT BE BAD?
Like everything, this scheme has pros and cons.
In europe they do the buy-backs with many cars being recycled. Both the French and Germans reuse the plastics and metals in new cars. That’s gotta be better for the environment.
My sons both have 10+ year-old cars that I bought for them as their first vehicles. They’re paying me back, but on the condition that the cars are maintained and regularly serviced. Their cars are probably worth less than $8000 each in sales terms, but worth much more than that, to them. I also have a 10yo locally manufactured second vehicle. This is worth no more than $5000, but to me – it’s worth considerably more, as it is in excellent condition for the age and the mileage. The $3000 scheme isn’t sufficient enough to sway me or my sons to consider a ‘buy back’. Furthermore (and as has been previously mentioned), lower income families may not be able to afford monthly payments at all on a newer vehicle as the $3000 wouldn’t get you started very well. So, I’m not sure how successful this scheme would be. Boost it to $5000 – maybe….?
The idea maybe good to stimulate the economy you get $3000 and than pull out your money more than $3000. Think yourself.
Tom, i agree totaly, but dont agree that the manufacturers will win.
there is still only so many sales to go around. if this grant comes in, what is does is compress the next 3 years worth of sales into one year.
what are they gonna call on to save them in 3 years time when sales fall even lower???
this is an extremely short sighted fix.
Italian stallion,
is someone driving around in a $500 datsun really the person that can afford getting into debt for 20K plus???
I cant see 2K in prospective buyers pockets really counting for that much when you have to spend at least 25K to get a decent small car let alone if you require a family car which is more expensive
G Man,
sure you would take advantage of this offer, but as you said you were gonna buy a new car anyway.
Giving the benefit to people like yourself who were going to buy new anyway doesnt really benefit the system.
your sale was gonna be made with or without the grant.
this is an idea to promote those who WERENT going to upgrade to suddenly do so.
Why dont they simply raise the import tariffs to a level where our own economy gets preference over the asian/american or euro economy.
the other countries sure as hell arent promoting our products over their own, so why should we promote theirs over ours.
I dont know how many jobs need to be shipped off shores before the government wakes up to it.
Knee jerking rudd is too busy trying to impress the world and fails to see our country is suffering while he is trying to make world leaders into mates
^^^
ha ha ha i contradicted myself in the first line.
I should have said mostly agree not totally agree
Sucks that those that didnt vote for the Milky Bar Kid have to cop his dealings………………
Ha Ha there won’t be many car left in Victoria if it was compulsory!!
Babe if you have been to Tassie most of their cars are under 10 years too…………..Morning —………………hows ya weekend ?
lol true Cupid. But in any case, isnt there a kernel of good policy in it? Cars 10yrs or older (Classics and enthusiast cars excepted) should be much more expensive to re-register as they generate such a heavy cost to society as a whole. banning it is a tad too harsh for a democracy.
it makes no sense because anyone driving a 10 year old can’t afford a new car and the 3000 is only going to make them buy another bomb that would negate the effect the scheme has. Altough some drivers have classics this only accounts for about 5% of cars registered. Although that 3000 could buy another plasma or parst for another car.
Yeah BM the problem is Labor can’t help but put us in debt and the Liberals can’t resist making the average Joe’s life a misery via master/slave industrial relations policy.
Liberals openly antagonise the unions before they actually do anything which eventually proves to be their undoing.Bunch of idiots.
We have had one hell of a boom now hang on for one hell of a bust.Greenspan and all the other “Accountants” got us in this mess as no one was actually at the wheel it would seem.
I frankly would prefer that a few jobs were lost rather than the government throw good money after bad in an attempt to revive things. This stimulous isn’t sufficient in this situation to make much of a differnce anyway and at the end of the day the Government will have a large debt to boot.
My advice to the newly unemployed, as we have a generous safety net in this country,is have a break until the recovery starts or when the rich want to start making money again and consumers start wanting again which is inevitable.
Did anybody ever succeed in picking themselves up by their own bootstraps?
I think its a good idea. If people can’t afford $3000 for a car then maybe they should not be driving. Catch a bus,train, or ride a bike!
What I was told when I was a young lad by my father,”If you can’t afford to buy it you will not be able to afford to run it.”
Thanks BM – Wall to wall sunshine here for two weeks and no rain. Yoohoo!
Most cars here (UK) are going to crusher after 15yrs with few surviving beyond that. Our 10yr old Pug worth £400. Needs a service , cam-belt change, new tyre and a host of minor repairs. Whilst it still goes the repair cost are too high to make it worthy so off to the scapper it goes.
ABOUT BLOODY TIME. Australia is the only 1st world country I know where 30 year old cars are still getting around on a daily basis. Australia is the only country whose airline fleet is NEWER than its vehicle fleet!! That’s right – the average age of a Qantas plane is less than the average age of a car, and yet planes last quite a bit longer than cars do. Unbelievable.
How many of you old car haters have any sort of basic mechanical skills?
I loved my teen years hanging out in my parents garage with my mates, working on old cars all night.
Go and buy your kids a safe car with abs, esp and the like. You may feel they are safe but will go through life needing to call the nrma to change a tire and never really learn to drive properly.
Old cars are part of our culture.
Times are changing. Holdens once made up 50% of cars sold in Australia. Imports used to be scare and expensive – now most cars are imports. Most cars sold used to be manuals – now automatics make up 80% of sales. Station wagons used to be popular – now only 3% of cars sales are wagons. Why hang on to the past?
Andy Says:
March 23rd, 2009 at 10:13 pm
Except Andy what about the pensioners? My parents are on the pension, and have a car over 10y/o. It is a 98 Outback Limited that I gave them, it is over maintained as it is serviced every six months and only does around 11k a year. For them buying a new car, even with $3000 from Govco would put them into a lesser car without any real benefit to the enviroment. Seeing as seniors are making up a larger portion of older car owners these days, can you see the problems in both this system and the age based registration system?
Smart idea, let’s give a low income earner $3K, but they now have to put themselves into more debt by getting a $15K loan to pay for their next new car.
If those Labor muppets accept this it’s confirmation their intent is to run Oz into the ground – and many of you voted for them.
At least I’m getting my $900 from Krudd. I’ll use it to detail my M5. ;-)
I think it’s a good idea.
Let’s say you have a car over 10yo. You want to buy another 2nd hand car but only have 2k budget. With those additional 3k, you get 5k. Therefore, the demand for those 4k-6k second hand cars will increase.
It continues, people who are selling those 4k-6k are getting their money and now are buying better second hand cars probably worth around 10k. Therefore, demand for those 10k second hand cars will increase.
See the pattern? It will continue all the way up to the new car market.
Realist your a twit! Not everyone who has a bomb of a car is a low income earner. Yeah we were better off with Liberals, yeah right. The whole global economy is in a spin and its not due to which political party is in.
Chit writes “Not everyone who has a bomb of a car is a low income earner”. How many company CEOs do you see driving 20 year old VN Commodores?
Mark Greenburg, how do you know? Do you have a CEO detector? By the way there are other jobs that pay a good income, moron.
Go to any office building and look at what car is parked in the space marked CEO or President or Director… I can guarantee you it won’t be an old bomb.
Ivan, you only get the $3k if you buy a new car, so it’ll have no effect on sales on second hand cars, it’ll probably reduce demand actually, worsening resales values whilst boosting the minimum value to $3k, hence compressing the second hand market car prices. And Frenchie, glad you could get a mint car when you first started driving, most people can’t, and rely on cars worth around that amount to get their first set of wheels. We don’t all live in the city and have access to buses and trains. My first car was a Telstar TX5 I got for $2500, and I needed it to get to work and school. Now that car will be worth at least $3k, and when you’re just starting out, $500 like two – three weeks pay. Many people had much cheaper cars as well, because our mummies and daddies didn’t buy our cars, we did.
Rarely have I heard so much hysteria. Nobody, pensioners, teenagers or anybody else, will be forced to get out of their old cars.
Talk this will only stimulate tomorrows buyers today, and therefore tomorrows sales will dry up is complete rubbish. If this were true, why does big business and industry (let’s face it the experts when it comes to retailing) continue on any given day to put on “sales” of every description, across every industry, car retailing included???
Also the argument people who drive “old” cars cannot afford new cars is certainly true for some people, but not everyone. Many people who can afford a new vehicle simply choose to allow their cars to age as a driving new car is not a priority for them. There are plenty of people with money that don’t need to “keep up with the Joneses”. And how many times have you heard someone say about their car, “there’s nothing wrong with it, I won’t get anything for it, so i’ll keep it…” This proposal would bring these car owners to market.
Someone else said the Used Car Industry would collapse. Really? At worst there would only be a minor price adjustment as all the rubbish is taken out of the market, otherwise business as usual as there will always be used car buyers.
One argument put forward above was that you need to spend 25K to get a decent car these days , as if that should make any difference anyway, but there is plenty of safe economical new cars for under 20K. There’s never been more choice.
Lastly some moron mentioned the money would only go on new plasma tv’s. This poster obviously failed reading comprehension at school, as the proposal in its current form provides cash to be put toward a new vehicle purchase.
This proposal is to applauded. There is not a single reason why it wouldn’t work and shouldn’t be introduced. We all win with the removal of old dangerous polluting oil leaking wrecks from our roads.
First making things clear:
That 3000 is to be used to buying a new or <1 year old. So you can’t buy $3001 car getting rid of your 20 year old car.
This idea is BRILLIANT idea. This scheme has worken in Europe – so why not in Oz? Surely those who have just bought a new car and don’t have old car <3000 worth would lament if this rule is brought.
There may be some disadvantage to wreckers – but new job will be generated to recycle the old car’s part (=almost like wrecking???).
Regarding those shrewd dealers who sell the old and rotten lemons to unsuspecting customers GOOD that they went out of business. Well, stay on dole until you find next job.
This scheme – like any other, won’t benefit all of the people right now. But, considering this scheme will stay – it will help everyone in the long run.
Even if only 25% people took the offer, 500000 new car will be sold!! So the car manufacturers and the agencies in line will have a super boost.
Bring it soon!!
(I have my Nissan Pintara on last legs…..!!!)
This would be great if it is used to buy a locally made car. What the govt should be doing is scrapping the GST on locally made cars – that would help the ailing car industry and save aussie jobs. I know a few holden workers who have this week off.
Ravith,
I think you numbers are a bit optermistic. You’d be lucky if 2.5% took up the offer.
I wonder if this is really a good idea: lets ecourage more borrowing, to but that new car, in the middle of a financial crisis caused by excessive borrowing??
There are good points and bad points on this scheme. My feelings are simply that the pricing will follow the LPG scheme / Scam. We were selling retro fits for $2,800 > $3,500 for Falcons, then the LPG handout came along and those systems jumped to $4800 > $6200!! Strange hey?
Again I cannot understand that if Govco are giving the money with the thought that they are going to get it back in Stamp Duty & GST, why don’t they just do the original thing that was supposed to happen when GST was introduced and get rid of Stamp Duty across the board? That would mean that the lower income earners would get a discount even if they could only afford $50/wk ($10,000 over 5 years at 10%).
I can hear the farmers now ringing up that Gov dept “mate Ive got this rusty old Vermilion Fire Falcon lying around the back shed, can ya come pick it up?” there goes the chance of any of us getting a project car :(
This scheme was introduced in the USA about 3 years ago. It was called (in typical Seppo style) “Cash For Clunkers”. The amount given was about $3′000 per car over 10 years old (from memory).
It did NOTHING for new car sales. Totaly and utterly NOTHING!
So why are we even thinking about trying a failed plan here??????
Bret
Worldwide economies and business depend on and grow through sound borrowing practices. This crisis was caused not by these practises, but by unregulated and unscrupulous lenders providing loans to people who could not afford to repay them.
This proposal has benefits for everyone who chooses to take advantage of it, all road users in general, and the wider community at large.