UK government's car scrappage scheme a hit

While the UK government had only reluctantly agreed to unveil the new car scrappage scheme last month on the assumption that it would fail, it has now hailed the scheme as a success since 35,000 extra vehicles have been bought through this scheme within two weeks of its launch.

Not only is the government taking the credit for the success of the scheme, Prime Minister Gordon Brown and business secretary Lord Mandelson are now urging consumers to opt for new vehicles under this scheme sonner rather than later, before it runs out.

The Society of Motor Manufacturers and Traders (SMMT) had presented this scheme to the government in early February, (See: UK auto body wants scrappage scheme to boost new car sales) but the Gordon Brown government only opted to introduce it in April, that too under great pressure from the car manufacturers and SMMT, said one commentator.

This delay has seen job losses and plant closures at a time when job losses in the UK have been mounting due to the recession. The scheme to help boost auto sales in the, had already demonstrated its effectiveness in Germany, France and Spain where it had been launched much earlier, a fact the SMMT and the UK media had been pressing the government to consider.

The UK government, in its budget last month, had announced the vehicle scrappage incentive scheme, which would start on 18 May, enabling consumers to trade their vehicles bought before 31 August 1999 for new cars at a rebate of £2,000, of which the UK government would give half and the manufacturer the other half.

The scheme is designed to run until March 2010 or until all the funds allocated for the scheme are used up.