Car scrap scheme ends after sales boost

LONDON (Reuters) - The vehicle scrappage scheme brought in last year to boost consumption and protect jobs ends on Wednesday after contributing to a fifth of new car registrations since its launch, the government said.

An old car displays the scrappage allowance at a Citroen showroom in Birmingham May 18, 2009. REUTERS/Darren Staples

The scheme, similar to those introduced in the United States, France and other countries to offset the impact of the economic downturn, gave motorists 2,000 pounds to trade in cars more than 10 years old for new, more fuel-efficient vehicles.

The 400 million pound initiative has helped 400,000 customers since it was introduced in the budget last April, the government said.

“The scheme was always time limited and today as it closes I am pleased to see scrappage has delivered the results we aimed for -- not just for manufacturers, but for the whole industry and its supply chain,” said Business Secretary Peter Mandelson.

“The figures show that this scheme gave vital support, boosting demand when the industry needed it most, helping to position the auto sector to meet the challenges of building a strong low carbon future.”

The government said scrappage had contributed to about a fifth of all new car registrations since the scheme started, with a survey showing a half of those using the scheme had never bought a new car before.

The survey also found more than half of buyers would not have purchased a new car without the scrappage scheme.

The Society of Motor Manufacturers and Traders said that British car production had risen for the fourth successive month in February, up 62.7 percent from the year before.

However, it has warned that conditions would get tougher after the scrappage scheme ended.

The Department of Business said the initiative had helped support 4,000 jobs in the car industry which employs 180,000 people in Britain and accounts for 6 percent of manufacturing employment.

Reporting by Michael Holden