So the government, in yet another astonishingly ham-fisted policy bungle, has managed to mess up the golden opportunity of a ‘scrappage’ trade-in incentive scheme.

UK gets car scrappage scheme

Scrappage 'compromise' attacked

In asking the car makers to stump up half the cash themselves, and for all cars in their ranges, Darling has not only wiped out the bulk of the profit margin on most small cars, he has also almost certainly dealt a body blow to the residual values of the most sought-after small cars.

With small cars becoming ever more popular, the residual values of cars like the Mini, Fiat 500 and Toyota Aygo have been becoming ever stronger. This is largely because they are almost impossible to get a discount on.

If BMW, Toyota or Fiat signs up to the scrappage scheme, they will be obliged to offer these cars at a £2k discount. And that’s only going to do one thing to the value of used examples.

Of course, there’s always a silver lining to such things and that's the fact that this might finally push down the values of nearly-new cars. So if you happen to be in the market for a nearly-new car over the next few months, chances are there are going to be a lot of good deals around.

Blog: Scrappage: it's £1k, not £2k

Blog: German makers scrap over scrappage

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