cars and rolling heaps of scrap metal have this common

And in the opinion of most economists, they should scrap the scrapping scheme.

It serves as a temporary subsidy for new production, sure. It's basically like the inverse of a guns for cash system. In the guns system, generally poor people turned in whatever worthless old guns they could get rather than fully or semi-automatic handguns and rifles that they had available for use in criminal enterprises (of the sort the scheme was supposedly designed to attack). Here the scheme basically subsidises the purchase of a new car by people who were probably already going to buy one, reducing the profitability of the companies involved (but compensating them for that loss) with the supposed intention of increasing short-term productive hours needed to manufacture the appropriate supply. I guess the theory is to get people who wouldn't be buying new cars out there and to keep the used market from flooding by eliminating a fair number of useless cars, but these turn out to be cars with either some marginal worth left turned in by people who can afford a new car right now with the subsidy. Meanwhile the totally useless cars that poor people would turn in if they could afford the new car, still go out and chew up energy and generate pollution. The actual supposed environmental target of the idea is totally counterproductive as they end up generating a ton of pollution to make new cars on the theory that people will trade up for them, but then neglect that the people who by environmental and economic standards would benefit us still cannot and thus do not participate (and further still that the normative consumer who buys vehicles on the basis of fuel economy already did so).

True there are people because this scheme targets the less useful environmental number of MPG who will benefit by consuming less energy with a new car (presuming they keep it at least a few years). And not all poor people (at least those with cars) own clunker, gas guzzling cars anyway. But the lead paragraph basically outlines the premise "Similar schemes in Europe have helped ailing firms sell more cars". It's entirely designed as a subsidy program, but sold to consumers as an energy efficient response to worldwide energy shocks. Consider who it helps most. Largely overseas manufacturers who make cheap and fuel efficient cars. Now since I own one such vehicle and consider most American, and some European, cars to be terribly inefficient piles of rolling metal and plastic, I'm not terribly distressed by this notion of free trade. But presumably the people who put in place the program are or will be disabused of this conception of stimulating demand when they start getting angry calls from Ford or GM.