It's been a while since car dealers had anything to cheer about, but the latest SMMT sales figures deliver the proof that scrappage is boosting sales at the cheaper end of the market. 33,000 sales under the scheme in July made it the first month of 2009 that saw more cars sold than the same period in 2008.

But scrappage now seems in grave danger of becoming a victim of its own success, burning through the £300 million of funding that the government has put into it at such a rate that - if demand continues - the entire budget will be spent by October. With the next month's '59-reg likely to tempt some more punters out of the woodwork, that now seems like a near-certainty.

UK scrappage sales figures

Okay, so we've done better than the USA, where the 'Cash for Clunkers' scheme effectively ran out of cash in less than a week - although it now looks likely to get another tranche of funding.

So what will happen in the UK next? Obviously there are only a finite number of potential scrappage buyers out there - those with both a qualifying car and the cash or credit necessary to qualify for a new one. But at the moment, demand shows no signs of slackening.

The motor trade is predictably keen for the government to find some more cash to keep scrappage running up to its intended termination date of February next year, especially as January's return to 17.5 per cent VAT will mean another price hike. But it's questionable, at best, whether the political will exists to make that happen.

And if there's no new money? Don't be surprised if scrappage degenerates into an unseemly scramble as buyers and dealers try to get their claims under the scheme registered in time.

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