Price rise undermines scrap scheme

Some consumers are no better off from the Government's car-scrappage scheme, a survey found

Rising vehicle prices have meant some consumers are no better off from the Government's "cash for bangers" car-scrappage scheme, according to Which? Car magazine.

Introduced in May, the initiative allows owners of cars over 10 years old to get £2,000 off a new vehicle when they trade in their old one.

But some car manufacturers have raised the list price of their vehicles by as much as 14% over recent months, Which? Car said.

It mentioned the list price of a Ford Fiesta 1.25 Zetec which has gone up from £11,570 in October 2008 to £13,195 in July 2009.

The magazine also cited the price of a Vauxhall Insignia 1.8i SE which has risen from £17,981 in January 2009 to £20,430 in July 2009.

Which? Car said another popular model, the Nissan Micra 1.4, had gone up 11% - from £11,200 in September 2008 to £12,395 in July 2009.

The magazine conceded global economic conditions had forced a rethink of car prices. But it added that some manufacturers had managed to keep price increases to a minimum.

A Hyundai 130, for example, had gone up just £35 - or 0.3% - since September 2008 while Volvo had actually reduced prices on some models.

Which? Car editor Richard Headland said: "Most buyers are being attracted by the £2,000 discount on a new car, and the scrappage scheme can offer some good deals.

"But with new car prices being hiked up, the scheme can be a false economy. Do your homework, as a pre-registered or one-year-old car may offer an even better deal."