The environment, the other big winner from the scrappage schemes
Although the scrappage scheme stimulates new car sales in Europe, it also plays a major role in defending the environment. Indeed, the replacement of old vehicles (over 8 or 10 years old, depending on the country) by new or recent cars has allowed rapid modernisation of the car fleet and has brought down the average age of vehicles: currently around 7 years in the EU.
This accelerated renewal of vehicles has led to substantial progress in terms of ecology, health and safety. According to the latest EU economic report on transport, published in March 2010, the average number of CO2 emissions decreased overall in 2009: by 4.5% in France and by 8% in Italy. Among other factors, this tendency is due to the scrapping schemes which have imposed a maximum emission level (of 140g to 160g) almost everywhere (except in Germany and England).
Whether new or used, the vehicles purchased in the framework of the scrapping scheme must also meet the Euro 5 or 4 standards as a minimum. Compared to the vehicles they are replacing, they are, de facto, more efficient, consume less fuel, and are less polluting (CO2, NOX, PM, HC, etc.) thanks notably to particulate filters on diesel engines.
Present-day cars are also quieter and safer thanks to equipment that is sometimes compulsory such as anti-lock braking systems (ABS), electronic stability control (ESC), airbags, seatbelt pre-tensioners, speed limiters, etc. In addition, regulations (pedestrian impact, for example) and EuroNCAP tests continue to set the bar higher. As for the scrapped vehicles, they are not sent to developing countries for a second life, as was often the case in the past. They are recovered, destroyed and recycled following international standards (notably ISO 14000).
The car scene transformed
Because of the CO2 ceilings (between 140g and 160g depending on the country) fixed by the scrappage scheme, new models in circulation are relatively "well-behaved": it’s most often a question of city cars or small family cars in the A, B or C category.
In 2008, 71% of registered new cars belonged to this category, according to the CCFA (French Automobile Manufacturers Committee). This tendency has continued to become more marked, to the extent that the profile of the average vehicle in Europe has changed. Whereas the engine size of cars did not cease to grow between 1990 and 2005, going from 1,600cm3 to 1,750cm3, it dropped suddenly between 2007 and 2009 to come back to 1,600cm3, according to the ACEA (European Automobile Manufacturers’ Association). The weight and size of the vehicles have also been tending to decrease.
This development should become even more marked over the coming years because of downsizing technology (see our case study dedicated to this subject). According to the latest EU economic report on transport, demand for vehicles emitting less than 120g/km of CO2 increased by 59% between 2008 and 2009. And the number of vehicles emitting less than 120g sold during the same period increased from 16% to 25%.
The main winners here are the Fiat, Volkswagen, PSA and Renault groups, which all offer a large choice of models below 140g of CO2. So these marques have made more profit out of the scrappage scheme than the upmarket manufacturers such as BMW and Mercedes that specialise in large engines.
Boom in alternative fuels
The implementation of the scrappage scheme, combined with other incentive measures, has encouraged the emergence of innovative models using alternative motorisation: hybrids but also LPG (liquefied petroleum gas) or CNG (compressed natural gas). According to the French Institute of Petroleum (IFP), engines running off gas do not emit much less CO2, but do discharge 10 to 30 times less NOx (oxides of nitrogen) than petrol or diesel engines, and emit no fine particulate. Hence their environmental advantage.
Supported by a €2,000/£1,730 tax credit in France, which may be used concurrently with the scrapping incentive, vehicles running off liquefied petroleum gas (LPG) performed spectacularly between 2008 and 2009, going from 2,600 to 25,000 registrations, according to the French Committee for Butane and Propane, which is an increase of 96%! This tendency was even more evident in the first quarter of 2010, with some 22,500 new LPG vehicles registered, almost as many as in the full 2009 financial year. The main players here: the manufacturer Dacia (Renault Group), Chevrolet and Fiat, which are constantly extending their range of dual-fuel models. Already well-established in Italy, with 600,000 vehicles in circulation, LPG benefited fully from the local scrappage incentive, which could go up to €5,000/£4,323 (or €6,500/£5,620 for an LCV) for the acquisition of a "green" model (LPG, hybrid or electric).
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