Car scrappage incentive scheme begins

Reuters
Monday 18 May 2009 08:57
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A scheme to give motorists 2,000 pounds to trade in their old banger for a new car comes into force today.

The 300 million pound initiative, announced in April's budget, aims to boost the ailing car industry and give a boost to manufacturers.

Customers will get the discount when they scrap a vehicle that is at least 10 years old, with 38 manufacturers taking part covering all the major brands.

"I am delighted by the response of the motor industry," said Business Secretary Peter Mandelson.

"This means more choice for consumers and a boost for British brands. The scheme has been met with a flood of enquiries from customers. It will provide a boost to the industry and kick-start sales."

Under the scheme, the government will contribute 1,000 pounds to a new purchase, with the remainder funded by car companies.

The plan, which follows the introduction of similar schemes across Europe, received a mixed reception when it was announced as car manufacturers had hoped the government would finance the entire subsidy.

Environmental groups also criticised the scheme saying it should be limited to the purchase of less polluting vehicles.

The car industry supports around 800,000 jobs in Britain, with 27 car and commercial vehicle manufacturers producing around 1.75 million vehicles a year and generating turnover of about 51 billion pounds, according to the Society of Motor Manufacturers and Traders.

Edmund King, President of the Automobile Association, said the project will pump 2 billion pounds into the car sector and benefit poorer drivers.

"This scheme has the potential to bring brand new car ownership to some of the UK's most disadvantaged drivers for the first time," he said. "In effect, the 2,000 pound incentive can act us a deposit against loans for many less well-off drivers."

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