Government extends car scrappage

The government has announced a £100m increase to the vehicle scrappage scheme, with van and car owners receiving added incentives to upgrade their modes of transport.

To date, 227,750 orders have been placed through the scheme and the scrappage scheme extension will fund a further 100,000 vehicles, bringing the total budget to £400m and covering up to 400,000 vehicles in total.

The extension will continue as a government and manufacturer partnership, with matched funding providing the £2,000 discount for each scrappage order.

Alongside the increased funding, the government will work with manufacturers to extend the benefits to van owners with vehicles over eight years old, rather than the current 10 year requirement.

Car owners will also benefit, with the age qualification changed by six months to extend the benefits to cars registered on or before 29 February 2000. The scheme will come to an end either in February 2010 or when the funding runs out.

‘The sector has been strongly affected by the recession, but the scrappage scheme has delivered a boost to manufacturers and the supply chain,’ said Lord Mandelson, business secretary. ‘We have listened to the concerns of manufacturers and are increasing the funding of the scheme to £400m.

‘But we must make sure that the help we do offer is targeted, limited and proportionate. This is not a blank cheque to the auto manufacturers, but recognition that there is still a short-term challenge to boost demand and confidence in the sector.’

Commenting on the announcement, Paul Everitt, SMMT chief executive, said: ‘Lord Mandelson’s announcement of an extension to the car scrappage scheme is an extremely important decision that will inspire consumer and business confidence. It will help to stimulate demand, giving more consumers access to it, and create a bridge to a period when economic growth is strengthened and more sustainable.

‘The additional 100,000 vehicles should help to counter the likely negative impacts of a return to the higher rate of VAT and the introduction of first-year VED rates.’