Scrappage scheme lifts car sales

AUGUST CAR SALES - TOP SELLERS Ford Focus 4,366 Ford Fiesta 2,968 Hyundai i10 2,431 Vauxhall Corsa 2,031 Volkswagen Golf 1,832 Peugeot 207 1,558 BMW 3 Series 1,482 Vauxhall Astra 1,355 Vauxhall Insignia 1,334 Toyota Yaris 1,331 Source SMMT Car scrappage: Winners and losers

The UK scrappage scheme continued to help new car sales in August with sales up 6% from a year ago, the second consecutive month of growth.

The number of new cars sold in the UK in August was 67,006, the Society of Motor Manufacturers and Traders said.

It attributed the rise to the scrappage incentive scheme, worth £2,000 a car, which came into effect in May.

However, total sales since the start of 2009 are still 21.5% lower than the same period last year.

The SMMT said that the incentive scheme had boosted demand, particularly for smaller cars.

"The scrappage incentive scheme is having a positive impact but with consumer and business confidence still fragile, there remain significant risks ahead," Paul Everitt, SMMT chief executive, said.

"It is essential that these early signs of recovery are sustained into 2010," he added.

In July, UK car sales rose by 2.4%, the first rise since April last year.

Key test

September will be a key test for the industry when the new '59' number plates are introduced.

August typically accounts for just 3.3% of annual new car registrations, whereas September normally makes up 17%.

CAR SCRAPPAGE FACTS More than 8bn euros ($11.4bn; £7bn) has been spent by the US, UK, German and US governments on car scrappage This equates to almost four million cars France was the first country to introduce its scrappage scheme, last December Germany has spent more than any other government - 5bn euros The US scheme provided the most generous incentive - $4,500 for certain cars The US and German schemes have already come to an end

Many major economies have introduced scrappage schemes to boost sales, including the US, Germany and France .

Under the UK scrappage scheme, a £2,000 incentive is paid to motorists who scrap cars registered before 31 August 1999 to buy a new car.

Half of the money is paid by the government and half by the car industry.

However, car industry representatives fear that once the £300m set aside for the scheme by the government runs out, sales could turn lower.

The Retail Motor Industry Federation (RMIF) says the funds could be exhausted by the end of the year.

"The scheme has been highly successful, but with the retail economic climate still fragile, demand still growing, and an increase in VAT scheduled for 1 January 2010, an extension of the initiative is vital," said Sue Robinson, RMIF director.

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