Extend scrappage scheme, plead car manufacturers

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The Independent Online

The Government was urged to extend the car scrappage scheme today after new figures showed that vehicle production fell by almost a third in August compared to the same month last year.

There were 56,737 cars built in UK factories, down by 31.5 per cent on August 2008, the Society of Motor Manufacturers and Traders reported.

The figures were worse for commercial vehicles, down by 48.5 per cent.

Car production has fallen by 44.6 per cent so far this year and by 62.7 per cent for commercial vehicles, the new data revealed.

The SMMT said the £300 million scrappage scheme fund was likely to run out by the end of next month and called on the Government to extend it to next February.



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Paul Everitt, chief executive of the SMMT, said: "The scrappage incentive scheme has had a positive impact on car production, with one in three cars built in the UK last month for the home market and total volumes starting to stabilise.

"However, underlying demand remains weak and the recovery is still extremely fragile. A continuation of the scrappage incentive scheme through to the original close date of February 28 2010 would help to sustain growth and bridge uncertainties associated with the ending of VAT discount.

"The continued fall in commercial vehicle output reflects ongoing weakness in the market. Specific action is needed to address business confidence and encourage investment in new business vehicles."



Cars built for the UK market reached a 56-month high of 19,173, a third of the total number produced, while cars for export were down by 37 per cent, said the SMMT.

The scrappage scheme, which allows new car buyers to receive a £2,000 discount when scrapping a vehicle that is more than 10 years old, has been hailed a success and is credited with slowing the decline of vehicle production.

Many car plants have extended shutdowns in August, but today's figures follow steady declines in production this year.

Car production was down by 17.9 per cent in July, 30.2 per cent in June, 43 per cent in May, 55.3 per cent in April, 51.3 per cent in March and 59 per cent in February.

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