UK Cash For Clunkers Scrappage Boosts Orders by 35,000

LONDON, May 29, 2009; Matt Falloon and John Bowker writing for Reuters reported that Britain's car scrappage scheme has boosted orders of new cars by 35,000 vehicles since it was announced in the April Budget, the government said on Friday.

British car sales have been falling sharply this year as the recession has cut into household and business budgets, but the government hopes the scrappage scheme will cause an upturn in orders and help revive the ailing industry.

New car registrations fell an annual 24 percent in April to 133,475 units, according to the latest figures from industry body the Society of Motor Manufacturers and Traders (SMMT).

Concerted industry pressure resulted in the introduction of a 300 million pound ($481 million) government scrappage scheme, which lets motorists trade in cars more than 10 years old for a 2,000 pound subsidy against a new model.

The scheme relies on industry to match the government funding -- splitting the 2,000 pounds subsidy between the two.

The SMMT said it was encouraged by the government claims, but was keen to see whether the orders would translate into hard sales for June and the second half of May.

"We are encouraged by the positive start to the scrappage scheme ... there has been an increase in showroom traffic and website inquiries, but it will be a good couple of months until we see the true impact on the market," a spokesman said.

Japan's Nissan said earlier this month it had raised production at its UK plant in Sunderland due to a boost from European scrappage schemes.

Nissan is the biggest car manufacturer in the UK.

Editing for Reuters by Greg Mahlich and Simon Jessop