Scrappage Scheme Drives Car Sales to First Rise in Over a Year

The Ford Fiesta - The Big Seller

New car sales in July rose year on year for the first time in 15 months as the Government’s Car Scrappage Scheme encouraged more buyers back into dealerships. Registrations rose 2.4%, the first rise since April 2008 and the Society of Motor Manufacturers and Traders (SMMT) were quick to declare the car scrappage scheme as being the key driver, noting 21% of last month’s registrations were the result of the plan.

Chief Executive Paul Everitt said: “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 2008”.

The Ford Fiesta was the biggest seller, continuing the trend of most people taking advantage buying smaller cars because they are cheaper. Registrations of mini segment cars more than trebled in July whilst super-minis saw a 15.7% rise.

Whilst the scheme is only to run until March 2010, or until its £300m budget is used up, lobby groups are calling for the scheme to be extended, noting that the program was earning as much in tax for the government as it was costing them in subsidies.

Similarly in Europe, calls are being made for extensions or for the schemes to be phased out slowly when many run out later this year. The €6bn German plan is expected to run out of cash in September 2009.