You have a very high opinion of politicians and policy-making. Perhaps too high an opinion, I fear.
It's not that uncommon for such policy decisions not to be fact-based because "of course it's better", so I'll keep my critical stance on governments' policies.
> Also, this argument sounds a bit like sunk cost fallacy to me: the car already exists, so whatever embodied energy it has is irrelevant.
No this is not the point. It costs energy and resources to scrap a car and to produce and distribute its replacement so this should be taken into account. Keeping a car longer reduces the need to produce more cars and to scrap existing cars. If I scrap my car every year than a car must be scrapped and a new car produced every year. If I keep my car for 20 years then this process occurs much less often, which is much more economical in terms of energy and resources.
The cost of the subsidy could also be spent on something else that may or may not have an higher impact.
I am just saying that this is the sort of decision that cannot be judged at face value, which seems to be what many people do ("great decision", "of course it's positive", etc), without digging quite deep into the numbers. And I must say that your comment goes in the same direction.
So, maybe it is positive and useful, maybe not so much. They would need to show the numbers for anyone to make an informed opinion.