Korean car firms cash in on scrappage scheme

south Korean car companies have emerged as the big winners from the Government's scrappage scheme to encourage people to buy new cars.

Figures released by the Society of Motor Manufacturers and Traders (SMMT) yesterday revealed a huge increase in sales for the four main Korean-based makes on the UK market. Hyundai car sales are up 203 per cent on this time last year; Kia's have risen by 65 per cent, SsangYong by 167 per cent and Chevrolet, formerly Daewoo, are up 77 per cent. The market as a whole is up just 2.4 per cent last month, though that is an improvement on the 30 per cent-plus falls in recent months.

For the first time a South Korean model, the Hyundai i10, has claimed a spot in the UK's top 10 sellers chart. Korean cars have done well because of their keen pricing, with the £2,000 scrappage allowance representing a relatively high proportion of the list prices. They have also enjoyed marked sales success as a result of the German scrappage scheme. The majority of their models are assembled in South Korea and eastern Europe; they make no cars in the UK.

Famous British makes, such as Mini, Jaguar and Land Rover, have seen less benefit from the scheme, with sales down 12 per cent, Jaguar by 31 per cent and Land Rover by 10 per cent on their showing this time last year.

The SMMT said 84,361 vehicles had been registered under the scrappage scheme since May, and that scrappage accounted for 21 per cent of July's 157,149 new car registrations total – 33,026 units. It has a much smaller impact on van sales – 499 vans were registered under the scheme, accounting for 1.5 per cent of the total scrappage registrations.

"The scrappage scheme has contributed to the first increase in new car registrations since April last year," said Paul Everitt, SMMT's chief executive. "Smaller, lower-CO2 emitting cars are taking the lion's share of registrations, which will have a positive impact in reducing emissions as well as boosting the UK motor industry."