Car sales rise 30%

Boost for car sales

January saw car sales rise by 30 percent in the UK as people rushed out to take advantage of the scrappage scheme which was due to end at the end of this month if the money hadn't run out.

Yesterday though, the Department for Business, Skills and Innovation (BSI) said it would allow buyers until the end of March to take advantage of the scheme, which offers consumers a GBP£2000 discount, half from the industry and half from the Government, to trade in vehicles that are more than ten years old.

If BSI estimates are correct, then there is GBP£70 million left of funding for the scheme.

Lord Mandelson, the Business Secretary, said: "Against the background of the economic downturn the scrappage scheme has proved a great success, driving UK car sales, protecting jobs and supporting the supply chain for car manufacture at a time when this sector needed it most.

"If you're considering buying a new car, you should place your order as soon as possible to avoid disappointment, because the budget is strictly limited," the British paper The Times reports.

The Society of Motor Manufacturers and Traders

The Society of Motor Manufacturers and Traders (SMMT) said that in January, the scheme accounted for 17.8 percent of sales - the seventh increase in a row. This was despite the return to 17.5 percent in VAT at the beginning of the year.

Paul Everitt, the SMMT chief executive, said, "The 29.8 percent increase in January new car registrations provides a better than expected start to 2010 for the UK motor industry.

"Scrappage continues to lift demand successfully and today's announcement of a continuation of the scheme to the end of March will allow the maximum number of people to benefit from the budget that's still available."

Will the demand continue?

Despite the fact the scrappage scheme has been extended by a month, 2010 is still looking like a strained year for the car industry.

The SMMT expects demand to fall by nine percent to 1.82 million units for whole of the year - the lowest level since 1993.

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