British Cash for Clunkers

EIN News says, "New Car Sales Rise by More Than 11%. Sales of new cars in Britain increased by more than 11% last month, providing fresh evidence of the motor industry's recovery from recession, new figures have revealed. There were 367,929 new car registrations in September, 11.4% more than the same month a year ago, as motorists continued to take advantage of the scrappage scheme, under which they receive a GBP 2,000 discount on vehicles more than 10 years old when they buy a new model. (uk.msn.com)".

This is the British equivalent of "cash for clunkers" program we have had in the US. It is a sales promotion technique, with intention to speed up sales of product. As this technique is applied, it is also the hope of the marketer that there will be some slight overall increase in sales, since a few of the immediate buyers may also return again at a future date. However, realistic marketers know that any increase in total sales will be small. Examples of cases where this will not work are as follows. A retailer offers master bedroom furniture for a year at 0% interest. How likely is it that the same buyer will return next year to purchase another master bedroom set? In a second example, Market Street just had a sale on canned baby clams. I bought three cans, which should last me about three months. In that same three-month period, how likely is it that I will purchase another can of baby clams?

Government should not be messing around with sales promotion programs. They will not help the overall economy, and any activity in this area is the responsibility of existing retailers, including automobile dealers.