British car sales driven up by scrappage scheme

Sales of new cars in Britain rose for the first time in 15 months in July because of a government-backed old-for-new scheme, industry body the Society of Motor Manufacturers and Traders said yesterday.

New car sales rose by 2.4 per cent in July from the figure for the same month in 2008.

"This was the first (year-on-year) growth in 15 months, reflecting the positive impact of the scrappage incentive scheme," the SMMT said in a statement.

On a 12-month basis, sales of new cars in Britain had plunged 15.7 per cent in June and by 24.8 per cent in May.

In a bid to kick-start Britain's ailing auto industry, the government has introduced a scheme whereby 10-year-old cars can be scrapped in return for a £2,000-pound (€2,359) discount on a new model.

"The impact of the scrappage scheme is clear and we are encouraged by the positive impact it has had, increasing new car registrations for the first time since April 2008," SMMT chief executive Paul Everitt said yesterday.

"Industry still faces a long road to recovery and we urge government to take action to sustain economic recovery through easing access to finance and credit."

The scrappage scheme came into effect on May 18. The SMMT said July's "modest 2.4 per cent growth" resulted in the sale of 157,149 vehicles.

The initiative is scheduled to last until February 2010 or until the £300 million of government funding expire.

Britain's government is contributing £1,000 per car to its scrappage scheme while the industry provides a similar amount. The British project is similar to ones introduced in France and Germany.

The top two best-sellers in Britain last month were Ford's Fiesta and Focus models. The US car company on Monday reported its first increase in sales in almost two years as the crippled American auto market showed signs of recovery after a US government-funded car trade-in programme.

The 2.3 per cent rise in July represented Ford's first year-on-year gain since November 2007 as the entire industry reels from a collapse in sales to levels not seen in decades.

Despite state aid, the global automaking sector remains in crisis as many consumers steer clear of buying vehicles amid the worst economic downturn since the 1930s.