Scrappage scheme stimulates auto sales

Posted on 29 May 2009 by The Manufacturer

Government is hailing its automotive scrappage scheme a success, with 35,000 cars sold under the incentive programme since it went live two weeks ago.

The scrappage scheme offers £2,000 discount on the price of a new car when one over 10 years old is scrapped. Government is putting up £1,000 from its own coffers for the incentive while the manufacturer provides the other £1000. The scheme will run until March next year or until government’s £300m pot for the scheme runs dry, whichever comes first. That means 265,000 more people can benefit from it.

Roughly one in five people that have bought new cars since Monday May 18 have taken the offer.

Business Secretary Lord Mandelson urged more people to get involved.

“Even after two weeks the sales figures are impressive. As it operates on a first come, first served basis and cannot last for ever, consumers should get in sooner rather than later for these great deals,” he said.

The Society of Motor Manufacturers and Traders (SMMT) welcomed the news but erred on the side of caution and refused to celebrate just yet.

“The industry has been encouraged by the positive start to the scrappage incentive scheme shown through increased orders, showroom traffic and web inquiries. But it will be a couple of months before we can really assess the true impact on the market through the monthly registrations data,” said the SMMT in a statement.

Nissan has extended the scheme to cars that are eight to ten years old and will foot the whole £2,000 itself for scrappages in this bracket. It will take on 150 extra staff at its Sunderland plant as a result of the added demand it is anticipating from the measure.