Car industry calls for Scrappage Scheme extension

The Society of Motor Manufacturers and Traders has written to business secretary Lord Mandelson urging government to extend the successful scrappage incentive scheme which has helped boost consumer spending and secure UK jobs in the motor industry.

After 15 months of consecutive decline in the new car market, the scrappage incentive scheme has reignited demand, resulting in year-on-year growth in July and August and a dramatic cut in the rate of decline in vehicle production.

“Consumer confidence is still weak and recovery remains extremely fragile,” said SMMT chief executive Paul Everitt. “Avoiding a relapse in demand is critical to the UK economy and an extension to the scrappage incentive scheme, which has already proven its credentials as a cost-effective support mechanism, will ensure a more stable outlook for vehicle demand.”

SMMT is calling on government to extend the Scrappage Incentive Scheme through to the original close date of the end of February 2010, to counter the likely negative impacts of a return to the higher rate of VAT and the introduction of the first year VED rates.