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UK Car Scrappage Scheme Extended with a £100m boost

UK Car Scrappage Extension made by Business Secretary Lord Mandelson at the Labour Party conference in BrightonIn an announcement made by Business Secretary Lord Mandelson at the Labour Party conference in Brighton, an additional £100m has been added to the UK car scrappage scheme following pressure from the motor industry to extend it.  Lord Mandelson and Chancellor Alistair Darling had been lobbied by trade bodies including EEF, the manufacturers’ organisation; the Society of Motor Manufacturers and Traders (SMMT).  Mandelson’s announcement was received warmly by those that had called for it.

The extension brings the total cost to the government to £400m, enabling the discounted sale of up to 400,000 new cars.  The original budget for the scrappage scheme (providing a £2,000 discount to buyers of new cars when they scrap one over ten years old) is due to expire shortly having resulted in 227,750 new car orders as a result but has now been extended to February 2010.

The Government will also extend the benefits to van and light commercial vehicle owners with vehicles over eight years old (February 28, 2002 Y registration or earlier, or 51 plate vehicles) rather than the current 10-year requirement

“Our car scrappage scheme has been so successful the money is running out,” stated Lord Mandelson. “The industry has asked that the scheme be topped up. Conference, we cannot do everything but that does not mean doing nothing. So today I am extending our popular car scrappage scheme with extra money for an additional 100,000 cars and vans.”

Industry sceptics are however critical of how little of the UK scrappage fund has gone to UK car manufacturers, estimating that £320m will ultimately go aboard to countries such as South Korea, India, France, Spain, Slovakia, Poland, Germany, China, the Czech Republic, Italy and Japan.  Approximately 86% of the vehicles purchased under the scheme have been manufacturered abroad.  Nearly £20m of the fund has gone to the Korean Hyundai / Kia group which has no manufacturing, design or engineering base in the UK.  The Indian-made Hyundai i10 city car overtook the Vauxhall Corsa (made in Spain) to become the third best-seller in Britain.

However, UK manufacturers and dealers are ultimately grateful for the Government scrappage scheme. Nissan has had to hire to re-hire 350 manufacturing staff on temporary contracts and Paul Willcox, managing director of Nissan UK said of the extension: “We believe the extended scheme will continue to have a positive impact and are happy to see that the Government has placed the car industry at the top of the economic agenda, where it belongs.”

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