Cassation premium is not a huge hit in Romania

The most popular programme meant to renew the Western car park, consisting in the takeover of old cars in exchange for a discount when buying a new car, that is the so-called cassation premium, seems impossible to introduce in Romania, because of the lack of interest of authorities, which would hold an essential role.

After such an initiative by Ford bumped into the Government’s lack of interest, a similar plan currently studied by Iveco group could be shattered because of the lack of adequate legislation.

Romania’s car park, which is estimated to be over 11 years old, comparable to the cassation age of many mature countries from the point of view of the car industry, stands no chances of being renewed soon, since the Government shows little interest in this domain, although one of the conditions for European Union integration is that the car park should be seven years old.

At the end of last year, there were approximately 3.91 million cars in Romania, only 5.2 percent higher year-on-year, the motorisation degree being of 132.4 cars per one thousand inhabitants.

Within a more general plan, Ford proposed in November, through its representative in Romania, Romcar, a programme for the renewal of the car park that included a $1,000 discount for all owners of old cars who intended to acquire a Ford vehicle. The project, entitled “Ford scrappage action in Romania,” met the opposition of authorities, which did not want to get involved in a plan where the American part came with 20 million euros. Ford prepared similar plans for three East-European countries, Slovenia, Croatia and Romania.

The group asked for the support of the Romanian state, which was supposed to get involved in the plan by providing an appropriate space for Ford’s building up a centre for material cassation and recycling, by finding destinations for the use of recouped material, as well as by possible incentives.

A similar project has been tackled by Iveco and it is to be finalised in September-October, Cristian Helvig, trade manager of Iveco office in Romania, told Ziarul Financiar. He says however that the current legislation is not yet adequate for this initiative.

Beside eliminating “scraps” from the streets, such programmes would lead to a better use of roads, as well as to increased environment protection by reducing toxic substances.

Such projects are a novelty only for Romania. They enjoy real success in Europe, especially in countries such as France, Italy or Spain. Thus, between 1994-1996, the French government offered a cassation premium for vehicles older than ten years standing at 5,000 French francs ($1,000) at that time.