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Scrappage scheme kicks off with 35,000 sales

Despite much scepticism from many parties, the government scrappage scheme to boost car sales in the UK with a £2,000 incentive has resulted in 35,000 new car sales within the first two weeks.  Ministers from the Department for Business, Enterprise and Regulatory Reform believe that those sales of vehicle would not have been made had it not been for the governments investment of £300m towards the scheme, to which it contributes £1,000 per car sold.  Business Secretary Lord Mandelson said: ‘the scrappage scheme has got off to a flying start. It has given car sales a major boost and offers consumers a great deal.”

A spokesman for the Society of Motor Manufacturers and Traders said: ‘The (motor) industry has been encouraged by the positive start to the scrappage incentive scheme shown through increased orders, showroom traffic and web inquiries.  But it will be a couple of months before we can really assess the true impact on the market through the monthly registrations data.” 

Manufacturers benefiting from scrappage scheme
Individual manufacturers are also acknowledging the benefits of the scheme on their new car sales figures.  Citroen has seen demand for its cars increase by 30% compared to May 2008, although did begin offering the scheme before the official launch.  Korean car manufacturer Kia has also benefited early on in the scheme, where a spokes person stated “we’ve taken 4,000 orders on the back of the scrappage scheme”.  Kia offers offers one of the cheapest small available cars under the scrappage scheme, the Picanto available for £4,195.  Ford also announced having taken over 3,000 orders in the first week following the launch on the 18th May.

Boost for small car sales
Car sales in the UK had already fallen from 1.8m in 1999 to 1.45m in 2008 and so far in 2009, sales figures had dropped by between 20% and 30% over the months compared with last year.  The types of vehicles that are popular among the initial 35,000 sales has resulted in motor industry officials thinking that the scrappage scheme would be most beneficial to those who make small, fuel efficient cars.  The knock-on effect of the move towards smaller, more economical vehicles could now be a shortage of availability.  Robert Forrester, chief executive of Vertu, the UK’s ninth-biggest dealer.said “used car stocks are very lean, while some [new] cars are in short supply – there is a shortage of small cars in the UK – you try getting hold of a Ford Fiesta or a [Citroën] C1.”  In direct response to the scheme, Nissan has increased production in its Sunderland plant to meet anticipated demand and maximise sales.

The initial results are encouraging and a much needed boost for the UK car industry however the government has re-iterated that the offer is finite and those interested should make enquiries soon to take advantage.  Lord Peter Mandelson, said “As it operates on a first come, first served basis and cannot last forever, consumers should get in sooner rather than later for these great deals.”

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  1. Hyundai wins on UK scrappage sales
  2. UK Scrappage Scheme Now Official
  3. Korean manufacturers and small car makes win from UK scrappage scheme

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