Vehicle scrappage programs serve a dual purpose of promoting the automobile industry and reducing vehicular emissions. However, the success of scrappage programs depends on consumer participation. In this study, we examine the optimal policy for consumer participation in vehicle scrapping programs, emphasizing the cost incurred by consumers as a key determinant of voluntary engagement. We develop a dynamic optimization model to minimize the costs consumers incur during vehicle ownership. Our findings suggest that frequent drivers derive greater benefits from participation, and monetary incentives provided by policymakers encourage earlier vehicle scrappage. Additionally, we assess an optimal scrappage policy in which the replacement vehicle is an electric vehicle, in the presence of secondary markets. We found that vehicle scrapping programs are effective in secondary-market-dominant regions only if consumers are offered varying subsidies for scrapping their vehicles. Results indicate that replacing an aging vehicle with an electric vehicle offers a cost-efficient alternative by reducing overall lifecycle vehicle expenses. These insights provide a framework for policymakers to design effective subsidy structures, based on the region's secondary-market penetration, that enhance consumer participation. Specifically, implementing heterogeneous subsidies—structured as a varying function of vehicle age—can accelerate consumer engagement in vehicle scrapping programs, thereby maximizing policy effectiveness.