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Evaluation of the National Vehicle Scrappage Program

Annex 5 Comparison with Other Jurisdictions

Final Report

July 12, 2011

Comparative Summary of Key Features of Selected International Programs
Program FeatureU.S.
Program objectivesEconomic stimulus Environmental:
improve overall fuel efficiency by modernizing vehicle fleet
Program duration2009
Total program cost (approx. in $CDN)$3B
($1B increased to $3B after high early demand)
Cash incentive per vehicle (approx. in $CDN)$3,500– $4,500
($USD)
Rebate for replacement vehicle increases with fuel efficiency (e.g., $4,500 for new vehicles with improved fuel efficiency of 5 or more MPG)
Age of vehicles targeted for scrappage< 25 years
Replacement vehicle purchase requiredYes
Type of replacement vehicle requiredNew
Environmental criteria for replacement vehiclesFuel efficiency must be a minimum of 18 MPG (approx. 13 km/100)
Other restrictions / requirementsMaximum retail price (MSRP) of $45,000
Scrappage requirementsPermanent disabling of the engine
Program take-up: maximum number of vehicles678 000
Environmental impacts: CO2reduction–cumulative annual abatement by 2011 (tonnes CO2)N/A
Environmental impacts: fuel efficiency improvements –average reduction per vehicle9.2 MPG
(58% improvement overall: 10.3 MPG for passenger cars, 5.5 for Category 1 trucks, 2.1 for Category 2 trucks)
Other impactsOverall, 84% of consumers traded in trucks and 59% purchased passenger cars.
One of the most popular deals under the program was the exchange of an old full-size pickup truck for a new full-size pickup.
Government reports estimate the program contribution to U.S. 2009 GDP at $3.6B (Council of Economic Advisors, Sept. 2009) to $3.8B (NHTSA Report to Congress, Dec. 2009).
Other comments, critiques of government estimates of impactsA University of Delaware study concluded that each vehicle trade had a net cost of approx. $2,000 and that total program costs exceeded economic benefits by $1.4B.
A University of Michigan study found that the incremental improvement in the average fuel economy of all vehicles purchased under the program improved by a maximum of 0.7 MPG.

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Program Feature

UK

Program objectives

Economic stimulus
Environmental (not a priority):

  • Remove older vehicles from the road
  • Encourage purchase of new, safer and potentially more environmentally friendly vehicles

Program duration

2009-2010

Total program cost (approx. in $CDN)

$700M
($500M increased by $200M to add another 100 000 vehicles)

Cash incentive per vehicle (approx. in $CDN)

$3,500
(50% government and 50% mandatory industry contribution)

Age of vehicles targeted for scrappage

> 10 years

Replacement vehicle purchase required

Yes

Type of replacement vehicle required

New

Environmental criteria for replacement vehicles

None

Other restrictions / requirements

Vehicle rebate must be matched by industry

Scrappage requirements

None

Program take-up: maximum number of vehicles

400 000

Environmental impacts: CO2 reduction–cumulative annual abatement by 2011 (tonnes CO2)

280 843
(The average CO2 value of 133 g/km for new cars purchased was 10.9% below the average value for non-incentivized new car purchases and 27% below the average value for scrapped cars)

Environmental impacts: fuel efficiency improvements –average reduction per vehicle

N/A

Other impacts

--

Other comments, critiques of government estimates of impacts

--

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Program Feature

Germany

Program objectives

Economic stimulus
Environmental (not a priority):
although the primary program objectives were economic, the program was named “eco-premium” to achieve broad political and social support

Program duration

2009-2010
(end dates of December 2009 for purchase of new vehicle and June 2010 for scrapping of old vehicle)

Total program cost (approx. in $CDN)

$8B
($2.4B raised to $8B after high early demand)

Cash incentive per vehicle (approx. in $CDN)

$4,000

Age of vehicles targeted for scrappage

> 9 years

Replacement vehicle purchase required

Yes

Type of replacement vehicle required

Maximum 14 months old
(with prior ownership in Germany)

Environmental criteria for replacement vehicles

Vehicle must meet 2004 emission standards

Other restrictions / requirements

--

Scrappage requirements

None

Program take-up: maximum number of vehicles

2 000 000

Environmental impacts: CO2 reduction–cumulative annual abatement by 2011 (tonnes CO2)

1 150 204
(The average CO2 value of 142 g/km for new cars purchased under the program was 8% below the average value for non-incentivized new car purchases)

Environmental impacts: fuel efficiency improvements –average reduction per vehicle

N/A

Other impacts

The number of new cars from foreign car makers sold under the scrapping program was much higher than the number scrapped (i.e., the market share of non-German manufacturers increased).

Other comments, critiques of government estimates of impacts

There was some fraud from resale of scrapped cars because there was no requirement to permanently disable the engine (i.e., an estimated 50 000 scrapped vehicles were exported to Africa and Eastern Europe).

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Program Feature

France

Program objectives

Economic stimulus
Environmental:

  • CO2 reduction (secondary)

Program duration

2008-2009
(a scrappage incentive introduced in 2007 was substantially improved in December 2008)

Total program cost (approx. in $CDN)

$950M
(initial $350M increased to $950M)

Cash incentive per vehicle (approx. in $CDN)

$1,500
A bonus was paid to purchasers of lower-emitting vehicles: e.g., $1,500 for a car rated under 101 gallons per kilometre (g/km); $7,500 for a car rated under 60 g/km (electric cars).
The basic incentive was reduced in steps in 2010, i.e., to $750 in June.

Age of vehicles targeted for scrappage

> 10 years

Replacement vehicle purchase required

Yes

Type of replacement vehicle required

New

Environmental criteria for replacement vehicles

Vehicle must meet stricter CO2 standards of 160 g/km or less

Other restrictions / requirements

--

Scrappage requirements

None

Program take-up: maximum number of vehicles

600 000

Environmental impacts: CO2 reduction–cumulative annual abatement by 2011 (tonnes CO2)

276 782

Environmental impacts: fuel efficiency improvements –average reduction per vehicle

N/A

Other impacts

Sales of cars emitting less than 130 g/km increased from 30.4% in 2007 to 55.5% in 2009 as a result of scrappage incentives. Sales of cars emitting more than 250 g/km (“gas guzzlers”) “nosedived” from 24.3% in 2007 to 9.3% in 2009.

Other comments, critiques of government estimates of impacts

--

 

Sources of Information (International Comparison):

Assessment of the Effectiveness of Scrapping Schemes for Vehicles: Economic, Environmental and Safety Impacts, IHS Global Insight, prepared for the European Commission, DG Enterprise and Industry, Automotive Industry, March 2010, Final Report and Country Profile Annex.

Evaluation of the Clean Transportation Theme of the Clean Air Agenda, Transport Canada Evaluation and Advisory Service, November 2010.

A sample of international vehicle scrappage programs(September 2009), table of comparative statistics provided by the NVSPOutreach Division.

Une évaluation du bonus malus automobile écologique, Commissariat Général au Développement Durable, No 53, Mai 2010.

U.S. Department of Transport, August 26, 2009 press release on C.A.R.S. program statistics.

Is CARS a Clunker?, Burton A. Abrams and George R. Parsons, University of Delaware, The Berkley Electronic Press, Vol. 6 (2009), Issue 8.

The Effect of the “Cash for Clunkers” Program on the Overall Fuel Economy of Purchased New Vehicles, Michael Sivak and Brandon Schoettle, University of Michigan, Transportation Research Institute, Report No. UMTRI-2009-34, September 2009.

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