An insider's view: scrappage scheme success

Tony Whitehorn has been Hyundai UK's managing director for nearly four years, but he never dreamed he'd see the time where his company is taking almost 300 orders per day for new cars. Such is the success of Britain's scrappage scheme that, as of July, Hyundai has received 17,000 orders.

Size matters

Unsurprisingly, the most popular new cars for buyers taking advantage of the scrappage scheme are among the cheapest and they don't get much cheaper (or smaller) than the Hyundai i10. It's already the most successful car in the whole scheme, taking one in 12 of all orders placed in the UK using scrappage. Hyundai has sold 10,000 so far through the scheme and What Car? labelled it 'Britain's Best Scrappage Buy'.

However, the larger i20 supermini is doing well too, securing nearly 5,000 sales to date. Tony Whitehorn comments: "In this sector of the market and in this economic climate, buyers are incredibly price conscious. Other car companies have piled on the pounds with punitive price increases, meaning that comparative mainstream models can cost 30 percent more. That's too big a difference to ignore."

Keeping up

With such a phenomenal increase in sales, Hyundai UK has had to ask the Indian factory making the i10 and i20 to move forward production of right-hand drive cars. Every shipload of 1,000 cars arriving in Tilbury, Essex is already spoken for, which explains why the company's import centre there is working around the clock. On top of that, Hyundai's dealers employ about 3,000 staff, who have never been busier.

Whitehorn says: "It's crucial that we get the cars out to buyers as soon as possible, and not only because the customers want their nice new car. The government funds are fast running out, and we want to make sure Hyundai buyers can secure their slice of the scrappage handout before the scheme ends."

Trade-ins

Although the most popular cars traded in under the scrappage scheme are the Ford Fiesta and the Nissan Micra, Hyundai's dealers have also been given several cars with Porsche, Rolls-Royce and Jaguar badges on their bonnets, along with one dilapidated old Morris Minor.

How long will it last?

Much has been said about the longevity of the scrappage scheme. The British Government has committed £300 million to support the initiative, which allows for 300,000 buyers receiving £1,000 of the purchase price of a new car. The official line is that, if the funds are not all used up, the scheme will come to an end in February 2010. Tony Whitehorn told Yahoo! Cars that he does not expect the money to last as long as that, with funds potentially running out before the end of 2009. However, he also points out that it's pretty much a self-funding scheme, with income from VAT increasing and the money from car sales going back into the UK dealer network, allowing its employees to spend money.

A betting man would suggest that the Government will extend the scheme. Tony Whitehorn certainly hopes so, as it has done wonders not only for sales of Hyundai cars, but for its visibility as a mainstream brand.

Shane O' Donoghue