French coronavirus recovery incentive scheme replaced after cap reached

28 July 2020

28 July 2020

The French government’s scrappage scheme has reached its 200,000-vehicle cap after just two months. The programme aimed to get high-polluting vehicles off the roads, replacing them with cleaner models. It also sought to throw a much-needed life raft to an automotive market caught in the current of the coronavirus (COVID-19).

The Ministry of Ecological Transition announced it will be replacing the recovery scheme with a conversion bonus. Applicable from 3 August, and will closely resemble one that had been in place several years before COVID-19 struck Europe.

‘New’ conversion premium

Not unlike the COVID-19 recovery scrappage scheme, the conversion premium will look to assist French citizens to acquire lower-polluting vehicles by trading in an older model to be scrapped. The vehicles eligible for scrapping will remain the same too: diesels registered before 2011 and petrol models registered before 2006.

The Government also reduced the income ceiling for the new scheme, in an effort to target buyers from a lower-income background. Dependent on income, participants can receive either €5,000 or €2,500 for an electric or plug-in hybrid (PHEV). Meanwhile, purchases of diesel- or petrol-powered vehicles can be boosted by either €3,000 or €1,500, similarly dependent on income. Cars registered after 1 August 2019, with CO2 emissions less than 137 grams per kilometre are also eligible to receive the same bonus.

The French government said 800,000 vehicles have been scrapped under its replacement programme in the last five years. This includes 200,000 that were turned in after the COVID-19 recovery scheme came into effect in June. The Government hopes that the new scheme will make it possible to reach a target of one million subsidies delivered over the five-year period set by the president. 

Other measures will also come into force as the recovery plan draws to a close. Firstly, those opting to convert an internal combustion engine into an electric vehicle as part of a retrofit process will also be eligible for a premium. Secondly, there will be a state additional premium of up to €1,000, when a beneficiary lives or works in a low-emission zone (LEZ), and similar aid has been granted by the local authority in the LEZ.

Successful recovery schemes?

France’s €8 billion COVID-19 recovery package meant a €7,000 grant for private buyers of new BEVs costing less than €45,000, while PHEV buyers could claim a €2,000 subsidy. These grants, coupled with the doubling of the trade-in bonus, meant drivers could get up to €12,000 off the list price of a zero-emission vehicle.

These incentives saw the release of a substantial amount of pent-up demand. The county experienced a surge in used-car transactions; 595,942 used cars changed ownership in June, 29.1% more than in June 2019, according to the French carmakers’ association CCFA. 233,820 new cars were registered in France last month, an increase of 1.2% compared to the same period last year. Meanwhile, countries like Italy and Spain continued to experience declines in the month, although there were some signs of budding market recovery.

Recovery schemes have not just proven popular in France. Croatia’s incentive scheme for ‘energy-efficient’ vehicles saw such high demand that its funding was depleted in just two minutes. The Croatian Government had set aside HKR 44 million (€5.8 million) for the incentive scheme. However, the application website received 546 applications within minutes of opening. Of these submissions, 470 were for BEVs, highlighting the interest in the technology.