The UK’s scrappage incentive scheme has been extended for a further 100,000 cars.
Business Secretary Lord Mandelson announced the move, which has been called for by the car industry, in his Labour Party conference speech. It will mean an extra £100m from the government towards the scheme.
"Today, I am extending our popular car scrappage scheme with extra money for an additional 100,000 cars and vans," Mandelson told the annual conference
The move, which Autocar reported ten days ago, followed a formal application for an extension from the car makers' trade body, the SMMT.
“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," SMMT chief executive Paul Everitt said.
"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.”
The £300m of government money alloted to keep the scheme afloat until next March is set to run out this October - five months early. An extension of the scheme would cost an estimated £250m extra of government money, although additional VAT payments would offset this.
The car industry has been lobbying hard for the scheme's extension because it is concerned that next January's VAT rise will otherwise knock sales.
Under the UK car scrappage scheme a £2000 incentive is paid to motorists who scrap cars registered before 31 August 1999 to buy a new car. The government contributes £1000 and the remaining amount comes from the dealers and manufacturers.
In August, UK new car sales were up six per cent on 2008 levels but 2009 sales to date are 21.5 per cent down on last year.