The UK's scrappage scheme will be extended until the end of March, the government has confirmed
The government had previously set aside £400 million towards the scheme and it was due to run when all the money had been spent or at the end of February, whichever came first.
But not all the scrappage money will be spent by the end of February. In order to stop it remaining unspent, the Department for Business, Innovation and Skills (BIS) has moved the deadline by 30 days, to the end of March.
Lord Mandelson, the Business Secretary, said: “Against the background of the economic downturn the scrappage scheme has proved a great success, driving UK car sales, protecting jobs and supporting the supply chain for car manufacture at a time when this sector needed it most.
“If you’re considering buying a new car, you should place your order as soon as possible to avoid disappointment, because the budget is strictly limited.”
Since July 2009, year-on-year new car sales in the UK have been up every month, halting 15 consecutive months of decline. Around a quarter of a million new cars were registered under the scheme last year, out of 1.95m total sales.
November’s and December’s sales were among the strongest seen in 2009, as figures were up on 2008’s levels by 57.6 per cent and 38.9 per cent respectively. January’s sales, set to be revealed tomorrow, are expected to show further growth.
Late last year, BIS told Autocar that there would be no more extensions to the scheme, despite concerns that its withdrawal would lead to a fresh slump in new car sales.
Germany was the most lucrative market for scrappage last year, but sales have been on the slide since it ended in September. Sales last month were at the lowest level since reunification in 1990.
France, Italy and Spain, where scrappage incentive schemes are all still in place, all saw sales rise last month. But Fiat CEO Sergio Marchionne has long since warned that European sales would fall drastically should schemes be suddenly pulled from markets.