Page last updated at 11:37 GMT, Tuesday, 19 May 2009 12:37 UK

Carmakers end scrappage dispute

Industry hopes for car scrapping scheme

The dispute between carmakers and the government over the UK car scrappage scheme has now been resolved.

Ford and Honda had delayed the start of their involvement on Monday. Both had expressed concerns about VAT arrangements and tax liabilities.

But after talks with the government, they now have confirmed that they both will take part in the scheme.

Cars that are more than 10 years old can be scrapped in return for a £2,000 discount on a new model.

"The scrappage incentive scheme has the full support of the UK motor industry who will continue to work with government to ensure the scheme's success," said Paul Everitt, chief executive of the Society of Motor Manufacturers and Traders.

'Full weight'

Under the scheme, the government will provide a £1,000 subsidy, while the motor industry will provide at least a similar amount.

The scheme is designed to help revive car sales, which have been badly hit by the drop in consumer spending as the recession deepened. New UK car sales were down 28.5% in the first four months of 2009 compared with the previous year.

Business Secretary Lord Mandelson has said the £300m scheme will "provide a boost to the industry and kick-start sales".

Honda confirmed in a statement it would now join the scheme "following discussions between industry and government yesterday and clarification on the finer detail".

Ford, who sold more cars than any other manufacturer in the UK in 2008, also said it will now participate.

Latest SMMT figures show that Ford accounts for almost 17.5% of all cars sold in the UK so far this year, giving it the biggest market share.

"Ford is putting its full weight behind the UK vehicle scrappage scheme, which will not only boost sales but will also bring positive employment and environmental benefits too," said Nigel Sharp, Ford's managing director for Great Britain.

Ford said it has already had 3,000 extra orders from first-time customers for new cars as a result of the scheme.

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