Page last updated at 23:06 GMT, Tuesday, 30 March 2010 00:06 UK

Scrappage scheme comes to an end

Car being scrapped
Scrapping old cars helped preserve 4,000 jobs

At least 330,000 cars have been sold under the UK government's car scrappage scheme, which has come to an end.

Scrappage accounted for a fifth of cars sold after the scheme was introduced a year ago to help the recession-hit motor industry cope with falling sales.

The government estimates that 4,000 jobs with manufacturers and suppliers were supported by the scheme.

"I am pleased to see scrappage has delivered the results we aimed for," said Business Secretary Lord Mandelson.

The 330,000 figure could still rise as cars bought under the scheme might not yet be registered. The maximum figure would be 400,000.

'Vital stimulus'

Jorn Madslien
By Jorn Madslien, Business reporter, BBC News
The scrappage scheme has been a resounding success, having protected thousands of jobs in the motor industry.

But as scrappage comes to an end, many in the industry fear sales will fall.

It will be difficult to maintain similarly low prices as VAT has risen and the fall in sterling has made imported cars more expensive.

Besides, many who were going to buy a new car have done so earlier than planned.

Car sales are expected to fall more sharply in the UK and other countries that operated scrappage schemes during recent months.

It may well be a story of the higher they climbed the harder they will fall.

The UK scheme, which offered new car buyers a £2,000 discount if they scrapped a car older than 10 years, was jointly financed by carmakers and the government.

The scheme "provided a vital stimulus to the automotive sector during a difficult economic period", according to motor industry body SMMT.

The UK's automotive industry employs some 180,000 people in 3,300 businesses, accounting for about 6% of manufacturing employment in the UK, according to the Department for Business Innovation and Skills (BIS).

And although the scheme never set out to reduce harmful emissions from cars in the UK, it ended up doing so anyway.

"Cars bought through scrappage had average CO2 emissions of 133g/km, 27% lower than the average CO2 of scrapped cars," BIS claimed.

The scrappage scheme also helped manufacturers reach new customers.

More than half the buyers of cars under the scrappage scheme had never bought a new car before, even though six in 10 of those trading in their old bangers were older than 60.

'Swappage' schemes

As the scrappage scheme comes to an end, many in the motor industry are worried sales will now fall.

Lord Mandelson
Lord Mandelson has spent much time supporting the UK motor industry

However, the SMMT is not overly concerned.

"While the 2010 market is expected to dip, the recent increase in fleet and business demand is expected to soften the impact of the end of the scrappage scheme," it said.

"The scheme was always time-limited," said Lord Mandelson.

With the end of the government scrappage scheme some manufacturers are seizing the initiative by launching their very own swappage scheme, which will basically follow on with the same principles of offering a large discount in return for trading in your old banger.

There are no guidelines as to how these new schemes will operate, as they are run by individual manufacturers and you can expect varying terms and conditions depending on which new car you are hoping to buy.

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