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Saturday 05th of September 2009
September 4, 2009    

Scrappage scheme continues to be a success

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by Kay Murchie

The Society of Motor Manufacturers and Traders (SMMT) has today revealed a further rise in car sales as a result of the Government’s car scrappage scheme.

The scheme, which was launched on 18 May to boost the ailing car industry, pays consumers £2,000 to get rid of their old cars and replace it with a more environmentally friendly car.

According to the SMMT, car sales in August rose for the second consecutive month, up 6% compared with a year earlier.

The number of new cars sold in the UK in August was just over 67,000 with the best selling car being the Ford Focus, with its Fiesta model in second place.

However, the SMMT pointed out that total car sales since the start of the year are still 21.5% lower than the same period a year ago.

Paul Everitt, SMMT chief executive, comments: “The scrappage incentive scheme is having a positive impact but with consumer and business confidence still fragile, there remain significant risks ahead.”

“It is essential that these early signs of recovery are sustained into 2010,” he added.

Similar schemes throughout Europe and the US have also been introduced and have been extremely successful.

In the meantime in the UK, next month will prove to be a test for the industry when the new ‘59′ number plates are introduced.

Traditionally, August accounts for just 3.3% of annual new car registrations, whereas September usually accounts for 17%.

The £300 million initiative is to run until March 2010 but the Retail Motor Industry Federation (RMIF) believes the funding could run out by the end of the year.

Sue Robinson, RMIF director, explains: “The scheme has been highly successful, but with the retail economic climate still fragile, demand still growing, and an increase in VAT scheduled for 1 January 2010, an extension of the initiative is vital.”

Finally, last month the SMMT revealed a fall in car production but said the fall was eased by the car scrappage scheme.

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