UK car scrappage scheme boosts auto industry

Britain's beleaguered car industry could be in for a revival as its first signs became apparent last month though production fell once again. The 43 per cent drop in production in May was the smallest fall in 2009 and several manufacturers buoyed by brightening prospects have taken on workers or added shifts.

The government's scrappage scheme that allows motorists to trade in their old cars in return for a £2,000 subsidy for a new one appears to have achieved its objective of boosting demand. Around 60,000 motorists have already traded in their old under the scheme. (See: Decline in UK car production slows

Nissan, which allowed 1,200 employees to go at the start of the year, has recently taken on 250 temporary staff. New hiring has also been reported by Mini at Cowley.

Toyota has scrapped plans for introducing a four day week in August and September and an extra shift has been started at Jaguar Land Rover at its Solihull plant.

At Honda, too production has resumed after a lengthy shutdown at its plant in Swindon. A spokesman said the company was delighted to have cars rolling off the production line once again.

There are indications also in the huge stockpile of unsold cars that is getting reduced as sales pick up and reflect the impact of the government's scrappage programme.