Koreans first to feel benefits of UK scrappage scheme

Early signs that the Government's scrappage scheme may have boosted the motor trade came yesterday with the latest vehicle registration figures from the Society of Motor Manufacturers and Traders – but it is the South Korean rather than the British motor industry that seems to be benefitting most.

Car sales were down by 24.8 per cent on the year to May to 134,858 units, a broadly similar result to the 24 per cent drop recorded in April. However, the scrappage scheme only came into effect on 18 May, with some initial confusion as to which manufacturers were committed to it.

The SMMT said yesterday that, despite the trouble they had getting the scheme started, some 35,000 orders – yet to be converted into registrations – had been placed. And there are other indications in the data that the £2,000 incentive to trade in a clunker and buy a new car may be having a more immediate impact. Private sales were only down by 13.8 per cent on 2008, whereas business and fleet sales, ineligible for the scheme, declined much faster.

In Germany, where a similar incentive has been available since last year, some of the main beneficiaries have been makers of smaller and more value-oriented brands, the ones likely to appeal to scrappage scheme customers.

The Korean makes Hyundai and Kia, part of the same group, have been especially successful in Germany, and so it also seems has been the case here, with 36.6 per cent and 20.5 per cent uplifts on sales compared with last year.

Chevrolet-badged cars, many of which are made by General Motors' Korean subsidiary Daewoo and in eastern Europe, also saw a sharp rise – up 21.8 per cent. SsangYong, another Korean brand, is up 42 per cent.

In general, smaller cars saw a 50 per cent rise in sales, the only type to do so. The only notable British successes in the data come in the form of the UK-made Mini and the Nissan Qashqai, both now in the top-10 sellers.

The SMMT's chief executive, Paul Everitt, called the numbers "an encouraging start to the scrappage scheme".