Scrapping premium campaign 2018

According to a report by the Finnish Transport and Communications Agency Traficom, the scrapping premium campaign implemented in 2018 met the targets set for it well. The scrapping premium was used to recycle about 6,700 cars over the age of 17 years that were still in traffic use. These cars were replaced by new low-emission cars.

In the scrapping premium campaign, the average CO2 emissions of scrapped cars were 170 g/km, while the new cars purchased to replace them had an average emission level of 100 g/km, or about 40 per cent lower than the old car. Emissions from new cars purchased with a premium were about 10 g/km lower than the emission limit set for new cars in the campaign.

The scrapped cars had been in active use, having driven an average of 13,830 kilometers in the previous year. According to Statistics Finland, passenger cars are driven at an average level of 13,800 kilometers a year. Based on the mileage of recycled cars and the emissions of new and old cars, the scrapping premium can be estimated to have reduced CO2 emissions by about 6,500 tonnes per year. This corresponds to the annual CO2 emissions of about 12,000 average Finns traveling by car.

In the scrapping premium campaign, the average age of cars scrapped was 17.3 years, compared to 20.6 years for all cars scrapped in 2018. The lower average age contributes to the fact that cars scrapped with a premium are unlikely to have been recycled without the premium. The annual performance of almost 14,000 kilometers with cars over 17 years of age contributes to the high average age of the Finnish car fleet and the exceptionally long life cycle of cars.

As in the 2015 scrapping premium, the cars acquired with the scrapping premium were clearly cheaper and smaller than the average newly acquired cars. The average tax value of cars purchased with scrapping premiums was approximately EUR 19,000, compared to the average tax value of an average new car of approximately EUR 33,400 last year. The low price of cars purchased with a scrapping premium clearly shows that the users of the scrapping premium differ significantly from typical new car buyers.

The results of the follow-up study show that those who took advantage of the scrapping premium were lower-income earners and younger than new car buyers on average. The scrapping premium was of most interest to old car owners in those provinces where relatively few new cars are purchased. In the 2015 trial, about 60 percent of those who took advantage of the scrapping premium estimate that they would not have purchased a new car without the reward. No similar survey was conducted in the 2018 campaign. The corresponding proportion has probably been even higher in last year’s campaign, as it was not possible to acquire an old car just to receive a scrapping premium - the law required the recipient to own his recyclable car for at least a year. The scrapping premium clearly increased the number of cars returned for recycling. The average scrapping age of cars has been increasing continuously since 2008, with the exception of the scrapping fees of 2015 and 2018, which turned the scrapping age into a slight decrease.

Of the alternative fuels, gas in particular was a popular fuel in the scrapping premium, as the price of gas cars is clearly cheaper than that of all-electric cars and plug-in hybrids. For CNG and electric cars, the scrapping fee was EUR 2,500, while the fee was otherwise EUR 1,500. The share of gas cars in cars purchased with scrapping premiums increased to about 4 per cent, although only less than one per cent of the cars first registered last year were gas cars. Slightly more than 100 downloadable hybrids were purchased with a scrapping premium, although their average price is still more than double that of average cars purchased with a scrapping premium.

The scrapping premium brought significant new tax revenue to the state. The state collected about EUR 16 million in car tax revenue and about EUR 23 million in VAT revenue from cars purchased with scrapping premiums. The state spent about EUR 7 million on scrapping fees.