The rental and leasing industries have resoundingly rejected the chancellor Alastair Darling’s scrappage scheme as a missed opportunity warning that it may adversely impact used vehicle values.

The face the scheme will only apply to new vehicles has dashes the hopes of lease and car rental operators who wanted sales of nearly new vehicles will also be incentivised.

The BVRLA condemned the scheme as ill-thought out.

“This is yet another government initiative that has been announced before being thought through," said BVRLA chief executive, John Lewis.

ACFO was equally despondent. “We had promoted a scrappage scheme that would have incentivised the purchase of vehicles up to four-years-old powered by engines that meet Euro4 emission standards and have a CO2 figure of 165g/km or less,” explained ACFO chairman Julie Jenner.

“Such a scheme would have also had the benefit of protecting the residual values of de-fleeted company vehicles.

"We fear that by only including new vehicles within the scrappage scheme, demand for ex-company cars and vans will suffer.

"This will obviously hit residual values.”

Ross Jackson, managing director of Fleet Operations, agrees: “Second-hand values of existing cars are likely to suffer as some motorists take advantage of the scrappage scheme.

"Thus the scheme will prove to be a cost burden for many, particularly fleets.”

However, residual forecasting experts have said the scheme will have limited impact.

Glass’s predicts that the scheme is “unlikely” to have a significant impact on residual values.

CAP agreed saying it will have a “limited impact” on both the new and used car markets.

“Residual value reductions will therefore be limited to later used examples of the cheapest small new cars and vans,” said a spokesman.

Manheim also said the impact will be minimal.

“The scrappage allowance could reduce our lower-value part-exchange volumes, but we do not believe this impact will be significant,” said John Given, group sales director.

Others in the industry have welcomed the scheme.

“It will help motor manufacturers, dealers and the wider motor industry including ourselves as we also benefit from increased demand,” said Phil Moorhouse, managing director, Northgate Vehicle Hire.

The Government said the scheme meets the needs of the entire motor industry.

"It will also get older vehicles off the road and encourage consumers to invest in new, safer, and potentially more environmentally friendly models," said business secretary Lord Mandelson.

“This is targeted action with a capped budget and for a limited time, designed to boost the whole motor trade."