Scrappage effect awaited as car sales fall again

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The Independent Online

New car sales fell sharply last month, with the motor industry saying that it would take time for the Government's "cash for bangers" scrappage scheme to take effect.

A total of 134,858 new vehicles were registered in May 2009 - 24.8 per cent down on the May 2008 total, the Society of Motor Manufacturers and Traders (SMMT) said.

This was the 13th successive month that sales had dropped and registrations for the first five months of this year were down 27.9 per cent compared with January-May 2008.

First announced in the Budget in April, the car-scrappage scheme was introduced on 18 May.

The initiative enables drivers of cars and small vans which are more than 10 years old to get a £2,000 cash incentive when they trade their old vehicle in and buy a brand-new model.

The Government, which is putting £300 million into the initiative, said last week that 35,000 cars had already been ordered under the scheme and hailed it a success.

SMMT chief executive Paul Everitt said today. "While consumer confidence is improving, the UK motor industry is still facing a difficult economic climate.

"We have seen an encouraging start to the scrappage incentive scheme with 35,000 orders being placed since it was announced, although it will take time to feed into registration figures."

One crumb of comfort for the industry came from the fact that private sales fell only 13.8 per cent.

Diesel sales fell slightly, while the only sector to enjoy a rise was the mini segment which shot up more than 50%.

More than 92 per cent of car dealers have reported an increase in inquiries about new vehicles following the announcement of the scrappage scheme, a survey by the Retail Motor Industry Federation (RMIF) showed today.

The survey also showed:

* 48.5 per cent of the vehicles being bought under the scheme are priced between £6,000 and £8,000, with 22.1 per cent priced between £8,000 and £10,000;

* 66.9 per cent of the vehicles being purchased in the initiative have 1.0 to 1.3 litre engines and 19.1 per cent have 1.3 to 1.6 litre engines;

* 63.7 per cent of those buying under the scheme are aged 45 to 60 and 27.1 per cent are aged 31-45.

RMIF director Sue Robinson said: "Car sales should see a significant increase in the coming months as a result of the scrappage scheme. This will go a long way towards helping to revive consumer confidence, and the UK car market, making it a double win for buyers and business alike."

These were the top-selling models in May 2009:

1. Ford Fiesta
2. Ford Focus
3. Vauxhall Corsa
4. Volkswagen Golf
5. Vauxhall Astra
6. Peugeot 207
7. Mini
8. Ford Mondeo
9. Nissan Qashqai
10.Vauxhall Insignia