The UK government has announced a scrappage incentive that could boost new-car sales by up to 300,000 new units in the next 10 months, following similar schemes in Germany, France and Italy. UK car owners will be offered £2,000 if they swap a 10 year old car or van for a new model.
The £2,000-pound incentive, announced in the Budget Statment last week, will consist of £1,000 from the Government and £1,000 from carmakers and dealers.
Scrappage schemes have already boosted car sales in European markets including France, Germany and Italy.
The UK government has allocated £300 million towards the scheme, which will be matched by carmakers and dealers who decide to take part.
This should provide enough funding for 300,000 new cars to be bought through the scheme, which will start in the middle of May and continue until March 2010. Carmakers and dealers have generally welcomed the plan.
The Retail Motor Industry Federation said the scrappage scheme would boost the new car market and encourage consumers to get back into car showrooms
The Society of Motor Manufacturers and Traders said the plans were good news that should kick-start demand in the market. "The scheme recognizes the economic value of the motor industry and we are determined to make it a success."
The UK motor industry has been calling for such a scheme as sales dropped this year by 29.71% in the first three months of the year.
However, car sales in Germany, France and Italy increased last month aided by incentives which offer buyers up to 5,000 Euros to swap older cars for new, fuel-efficient models.
German car registrations increased 40 percent to about 401,000 in March while French sales were up 8.1 percent. In Italy, a 0.24 percent in March registrations to 214,218 was the first increase in new-car sales in a year.
Although, the scrappage schemes have not had a direct impact on sales of fleet cars, they have been seen as a positive stimulus at a time of great economic uncertainty.
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