Car sales up 30% in January

The Society of Motor Manufacturers and Traders (SMMT) has today revealed sales of new cars grew by 29.8% in January compared with the same month in 2009, boosted by the Government’s scrappage scheme.

The £400 million initiative, which was launched last May to boost the ailing car industry, pays drivers of cars at least 10 years old £2,000 off the price of a new vehicle. The £2,000 grant is made up of £1,000 from the Government and £1,000 from the carmaker.

Meanwhile, new registrations also rose in January with a total of 145,479 cars registered, the SMMT said.

New car sales have now increased year-on-year in each of the past seven months, according to the SMMT.

It was announced today that the scrappage scheme has been extended for one month - until the end of March.

However no extra funds will be provided for the scheme but the Government said the extension would give dealers and manufacturers “more time to prepare for and operate the exit phase of the scheme”.

Commenting on today’s figures, Paul Everitt, SMMT chief executive, said he remains cautious despite the encouraging figures.

He said: “Industry expects another difficult year, with the availability of finance, consumer confidence and sustaining demand post-scrappage key to performance in the second half of the year.”

According to the SMMT, the scheme is responsible for about a fifth of all new car registrations since its launch. However, UK car production fell 30.9% in 2009, said the industry trade body.

Business Secretary, Lord Peter Mandelson, added: “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.”

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