Page last updated at 10:25 GMT, Friday, 29 May 2009 11:25 UK

Scrap scheme boost to car sales

Car being scrapped
The government's scrappage scheme was launched in April

More than 35,000 new cars have been ordered through the UK's scrappage scheme since it was announced in April, government figures show.

This means that one in five of those who bought new cars took advantage of the £2,000 discount available for scrapping vehicles over 10 years old.

Ministers believe those cars would not have been sold had it not been for the financial incentive.

Motor industry figures say it is too early to declare the scheme a success.

Paul Everitt, chief executive of the Society of Motor Manufacturers and Traders, acknowledged that the scheme had enjoyed a "very encouraging" start - through increased orders, visits to car showrooms and internet inquiries.

However, he warned it could take a few months to fully assess the impact of the scheme.

The British Chambers of Commerce said it hoped the momentum could be sustained, "providing the embattled automotive industry with a much-needed boost".

Lord Mandelson: "It gives a huge boost to car manufacturers"


Sales of new cars in the UK fell 28.5% in the first four months of this year compared with 2008, as the recession deepened.

In an effort to revive flagging sales, the government set aside £300m for the scrappage scheme, which was announced in April's Budget.

That is enough to fund discounts on 300,000 vehicles, with public funds providing £1,000 - half the discount - and manufacturers covering the remainder.

Facing a bill of several hundred pounds for an MOT I swapped my old gas guzzler for a low carbon Fiat
Peter Dallmer, Andover

Carmakers had lobbied ministers to put in twice that amount, as happens with a similar scheme in Germany.

But despite initial industry disappointment and - according to some surveys - a lukewarm reception from motorists, the government believes its plan has already led to extra sales.

BBC business reporter John Moylan said that the figures reflected anecdotal evidence from car salesrooms.

"Makers of small, less expensive vehicles in particular have reported a significant pick-up in interest," he said.

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