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Scrap muddle

As the proud owner of a 19-year-old Renault 5 1.7 I was interested in the new initiative that might tempt me to sell our old car. I have read that the Citroen C1 is quite a good, cheap city car so checked it out with a couple of dealers in the North West. The basic model seems to have a manufacturers price of £7,795 OTR whereas dealers have been advertising the car at a discounted £6,395 for the past month. Therefore I thought that after taking into account the £2k scrappage initiative I might have to pay £4,395. Wrong. Both dealers informed me that the discount comes off the manufacturers price, hence I could buy one for £5,795. This seems rather peculiar given Citroen were able to offer it for sale for only £500 more before the Budget announcement. Does this mean that Citroen claims £1k back from HM Government but only gives a £500 additional discount for the car. Nice business if you can get it.

Asked on 6 June 2009 by

Answered by Honest John
No, it means that because the scrappage scheme puts people into the cheapest cars, demand and supply means that the cheapest cars ultimately become more expensive. Realistically, Citroen could not have afforded to supply a C1 for £4,395. The company already sells cars to the UK at a 20% less than Euro prices. And it isn’t going to sell cars at a loss if it doesn't have to.
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