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Scrappage scheme extended into March

04/02/2010

The scrappage incentive scheme has been extended for a month, the Government has announced.

The scheme, which the UK car industry has credited with helping to stabilise car sales during the recession, had been due to finish at the end of February 2010, but will now run until the end of March.

It is the second time that the scheme has been extended since its introduction, in Chancellor Alistair Darling's April 2009 budget. The programme originally had funding for up to 300,000 new registrations, but Business Secretary Lord Mandelson announced in September 2009 that a further 100,000 vehicles would be included - apparently in response to car industry concerns about the frailty of the economic recovery.

Announcing that the scheme would now continue until the end of March, or until funding runs out, Lord Mandelson stressed that the budget was strictly limited and that those interested in a new car should "order as soon as possible".

"Against the background of the economic downturn the scrappage scheme has proved a great success, driving UK car sales, protecting jobs and supporting the supply chain for car manufacture at a time when this sector needed it most," he added.

Figures released today by the Society of Motor Manufacturers and Traders (SMMT) reveal that, at 145,479 cars, sales were 29.8% higher last month than in January 2009. Some 17.8% of all sales were made through the scrappage scheme.

Hailing a "better than expected" start to the year, SMMT chief executive Paul Everitt added: "Scrappage continues to lift demand successfully and today's announcement of a continuation of the scheme to the end of March will allow the maximum number of people to benefit from the budget that's still available."

Despite this, figures released last month by the SMMT showed that car production fell by 31% in 2009. Announcing the slump, the organisation predicted that 2010 would be "extremely challenging".

Meanwhile, in Germany, sales have been falling since a similar scheme ended in September last year. Last month they had slumped to the lowest level since the country's reunification in 1990. This compares to a 2009 which had seen German sales up by almost a quarter on the previous year - by far the strongest increase across all EU countries.

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