UK Car Scrappage Scheme - what will it acheive?

So finally, after much speculation the Chancellor Alistair Darling has announced details of the UK Car Scrappage Scheme, offering a £2,000 discount on those scrapping a car registered on or before the 31st July 1999 - when buying a new car.

But what will this acheive?

The car manufacturer's have been heavily discounting new cars over the past year or so, in the face of a huge fall in demand (which has only increased the value of nearly new cars due to their lack of availability and the lower recent production levels) but can they afford to cut more? As I understand it, the government is only covering half of the £2,000 discount, with the manufacturers required to find the other half.

Preliminary data from the continent seems to suggest that similar schemes have worked there, although it should be bourne in mind that the price of comparable new cars is also cheaper in France and Germany, so more attractive there in the first place!

It also seems a little contradictory, that the original premise of such a scheme was on environmental grounds, attempting to get more 'polluting' and 'dirty' older cars off the roads, in favour of newer, more efficient cars. But the environmental lobbyists calls for the £2,000 discount to only apply to purchases of new 'eco' type vehicles with hybrid electric engines has been ignored.

I find this a little troubling, and feel I need to do more research into this. Why? Well, how much production energy/raw material/transportation damage is done when producing the average new car - compared to continuing to service, maintain and use a 10 year old car over the same, say 10 year period, before the new car is also 'scrap'???

My initial hunch, is that continuing to use the 'old car' would be more environmentally friendly!

So if the scheme is not actually anything to do with helping us save the planet - it must be just about saving the necks of the large car manufacturers like Ford, GM and VW - who have been over-producing and over supplying for many years.

Is the final conclusion, that we are now just bailing out the car manufacturers with more public money due to their poor business models, just like the bankers??? Is trying to twist the arms of the consumer, into borrow more money to buy new (rather than continue with their old car) the right thing to try to achieve - just after the debt bubble has burst???

Personally, I dont see this scheme acheiving much for anyone - if you currently drive a 10 year old car, are your the sort of person that is likely to buy new anyway?

I will do some more research...