Success of the car scrappage scheme?

The last few weeks have seen a series of car manufacturers closing the doors of their UK operations, yet the Society of Motor Manufacturers and Traders has released reports citing an increase in car sales since April.

Car Registrations have risen by 2.4 percent, a figure attributed to Gordon Brown's 'cash for bangers' scheme, where owners of non-environmentally friendly cars can 'scrap' in their tired four wheels and receive £2000 discount on a new fuel-efficient car.

Although many critics dismissed the scheme as a new gimmick by the government, the plan has now translated into sales as small cars have done especially well in the last few months.

However despite this small increase in sales the overall industry is struggling to recuperate during the economic downturn with sales down by 22 percent in comparison to last year.

However the car scheme, which mimicked a similar policy from the United States, may run out of money before it is due to end in February 2010. The £300 million fund injected by the government will run out by October if such popularity continues. However the UK budget is nothing in comparison to the emergency £1.18 billion inputted by the US government after the scheme ran out of money in the first week of operation.

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August 07^th 2009

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