A leading loan provider has added its voice to calls for encouragement to be given to consumers to buy a new car. AA Personal Loans said a cash incentive for owners of older, high-polluting cars to scrap them in favour of new, greener, safer models could boost the struggling motor industry and improve the environment.
The idea, first floated by industry groups, has garnered support from Business Secretary Lord Mandelson in advance of April's Budget, when an incentive package could be announced.
Mark Huggins, director of AA Personal Loans, said he had already discussed how the scheme would work with Downing Street officials, adding that it "ticks all the right boxes" and "would allow many families to buy their first brand new car".
He said that the scheme would prove popular: "A recent survey we carried out among more than 17,000 drivers showed that 28 per cent said they would consider taking advantage of such an incentive to scrap older cars."
A successful German scheme, offering up to €2,500 (£2,200) for cars over nine years old, has already resulted in 400,000 vehicles being scrapped. The Society of Motor Manufacturers and Traders says a similar initiative in the UK could stimulate 280,000 new car and van sales.
Motor manufacturers face an unprecedented drop in sales as the recession bites and credit dries up.