Car scrappage scheme gives sales a ‘major boost’

New figures out today show that more than 35,000 vehicles have been ordered through the Government’s car scrappage scheme since its launch on 18 May.

The scheme, which was introduced to boost the fall in demand for new cars, pays consumers to get rid of their old cars and replace it with a more environmentally friendly car.

The scheme has already proved successful overseas, particularly in Germany who reported a 40% increase in new car sales for March.

The £300 million initiative, which was announced in last month’s budget, will give motorists £2,000 when they scrap their vehicle (which must be at least 10 years old). The Government will contribute £1,000, with the remaining £1,000 funded by car firms.

According to the Government, the scheme is a success after one in five new car buyers opted to take advantage of the scrappage scheme.

Business secretary, Lord Peter Mandelson, said the scheme had given sales “a major boost”. “Even after two weeks the sales figures are impressive. As it operates on a first come, first served basis and cannot last forever, consumers should get in sooner rather than later for these great deals.”

In the first week alone, Ford said it had taken over 3,000 orders, while Citroen reported a 30% surge in demand.

A spokesperson for the Society of Motor Manufacturers and Traders said: “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.”

The scheme will run until the end of February next year or until the Government funding runs out.

The global economic downturn has resulted in a slump in demand for cars and Britain’s car industry has been no exception after 11 consecutive months of declining car sales.

The latest figures show that total British car production plummeted 55.3% last month, compared with April 2008.

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