Business secetary Lord Mandelson has confirmed the government will not extend the current scrappage incentive scheme.
The CBI and other business groups have been calling on the government to rethink its decision after new car sales saw positive growth in July and August.
The scheme is scheduled to end next March or when the £300 million set aside for it ran out, whichever comes first.
“At the moment we have no plans for extending or renewing it,” said Mandelson.
More than half of the money set aside for the scheme, which started in May, has already been spent. Motorists trading in a car more than ten years old for a new one get a £1000 government grant, which is matched by the manufacturer and dealer.
The SMMT announced last week that year-on-year new car sales for the UK in August were up six per cent.