So far some 330,000 have been ordered under the scheme. However, with a limit of 400,000 vehicles which can be scrapped, a further 70,000 people could still take advantage of the deal.

The Government have said that manufacturers had requested the extension until the end of March 2010 to allow them to prepare for the exit phase. However, there will be no additional financing for the scheme, which is funded by the Government and 38 car manufacturers.

Mandelson said: “Against the background of the economic downturn the scrappage scheme has proved a great success, driving UK car sales, protecting jobs and supporting the supply chain manufacture at a time when this sector needed it most.”

The Society of Motor Manufacturers and Traders (SMMT) says the scheme has accounted for a fifth of new car sales since it was introduced, but warns of a tough year once it ends.

On January 1st 2010 the VAT rate will return to 17.5%, meaning a £10,000 new car purchased through the Car Scrappage Scheme will cost an extra £250. The tax was cut from 17.5 per cent to 15 per cent in November 2008.

High profile retail establishments including Selfridges, John Lewis and Bluewater Shopping complex in Kent have reported strong Boxing Day sales figures in big ticket items such as flat screens and fridges as the savvy British consumer prizes last minute deals and saves the VAT difference.

Car Showrooms may also continue this post Christmas rush as new car models are at the higher end of the consumer market. Potential car buyers will be reminded that there are now less than 4 days left to take advantage of both the Car Scrappage Scheme discount together with lower 15% VAT rate.

The Car Scrappage Scheme is set to end on the 28th February 2010, so car buyers now have only 3 days to save the 2.5% in VAT and just 2 months to take advantage of the £2,000 discount.

Homeowners are also starting to take advantage of the new Boiler Scrappage Scheme, where a warm £400 incentive is being offered for replacing old and existing G-rated boilers for a new energy efficient boiler model.

Of the 158,082 sales last month, 21.6% were attributable to the car scrappage scheme, which is due to end in February or when funds run out, whichever is sooner.

CEO of the Society of Motor Manufacturers and Traders (SMMT) Paul Everitt, said: “The increase in new car registrations in November reflects the positive impact of the scrappage incentive scheme, customers avoiding the VAT increase in January and the very difficult conditions that we experienced a year ago.”

After Business Secretary Lord Mandelson said last week that the industry would have to cope with returning to normal market conditions, Everitt urged the Government to consider extending the scheme in its Pre-Budget report on Wednesday, noting that there was just an estimated £125m of funding remaining.

The November figures took new vehicle sales to more than 1.84m for the first 11 months of year, but this represents a drop of 8.8% on the same period last year. Full year estimates are for 1.95m sales versus 2.13m in 2008.

RAC motorist strategist Adrian Tink said: “We are still concerned about what will happen once the scheme ends and the discount bubble burst.” 

Edmund King, president of the AA noted of the new cars purchased through the scheme: “These cars are cleaner, greener and safer”, whilst making reference to a recent poll suggesting 13% of drivers would consider buying a new car if the scheme was extended.

UK manufacturing leader at Deloitte, David Raistrick said: “We may see interest rates increase next year. Furthermore, car manufacturers may find themselves needing to implement price rises due to the low value of sterling increasing the cost of imported cars and parts. The automotive sector must be prepared to deal with these challenges in order to ensure a long-lasting recovery.”

Sales rose to 1,388,136 as a result of double digit increases in four of Europe’s biggest five markets, with Germany leading the way in percentage terms and the UK in volume.

The European Automakers Association (ACEA) reported that Germany saw a 21% increase in sales, lifting volumes to 316,166 in the month while the UK hit 367,929 new registrations, representing an 11.4% improvement. Spain meanwhile shifted 77,374 units, reflecting an 18% hike with France also up, 14% to 183,110.

The governments of all four countries have actively supported car manufacturers by offering car buyers car scrappage incentives and discounts worth thousands of euros/pounds if they trade in their old cars for newer, more fuel efficient models.

Sales Plunge In Non-Scrappage Scheme Countries

In contrast, in countries where such car scrappage schemes have not been in operation, car sales have been hit hard by the recession. Ireland suffered a 34.7% drop in new car registrations in September, whilst Romania new car sales dropped a hefty 74.5%.

For the full year however the picture is different across Europe, with overall new sales down 6.6% to 10,946,161. Only the first few countries to run car scrappage schemes have seen an increase in sales for the first nine months of the year, with new registrations up 26.1% in Germany, 6.7% in Austria and 2.4% in France.

Mandelson - 100,000 more cars & vans

The UK Government has announced it is to extend its Car Scrappage Scheme beyond the original £300m allocation that was initially set aside.

Speaking today at the Labour conference in Brighton, business secretary Lord Mandelson said that the scheme, which is running out of money, would be extended to cover approximately 100,000 more cars and vans.

The scheme was on course to use up its cash allocation way ahead of the February 2010 end date, which was set at the outset of the scheme. However, Mandelson has given the industry a renewed boost with this announcement, commenting: “There are encouraging signs that the economy is picking up. But recovery remains fragile and uncertain, especially in manufacturing and one of its cornerstones, the car industry.”

Unions and Labour MPs have been urging ministers to extend the scheme to help save manufacturing jobs amid concerns car sales would fall sharply without continued incentives to boost demand. Derek Simpson, General Secretary of Unite told the conference that extending the scheme would help Labour “reconnect” with working people. 

A recent letter to Alistair Darling, signed by the EEF, UK Steel, the Manufacturing Technologies Association and British Plastics Federation, warned of the “clear risks” of ending the scheme, noting that demand for new cars could not be maintained without the incentives currently in place.

The 5bn-euro German scheme, the largest of any government, ran out early this month. It encouraged almost two million motorists to scrap their old cars in exchange for new ones.

The US version spent its $3bn allocation in a matter of weeks. The UK, US and German governments have spent a total of €8bn ($11.4bn; £7bn) on similar scrappage schemes.

The Ford Focus - Car Scrappage Scheme Big Winner

August Car Sales – The Best Sellers
1  Ford Focus 4,366
2  Ford Fiesta 2,968
3  Hyundai i10 2,431
4  Vauxhall Corsa 2,031
5  Volkswagen Golf 1,832
6  Peugeot 207 1,558
7  BMW 3 Series 1,482
8  Vauxhall Astra 1,355
9  Vauxhall Insignia 1,334
10 Toyota Yaris 1,331
Source: SMMT
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The Society of Motor Manufacturers and Traders (SMMT) stated there was a clear link between the Car Scrappage Scheme and sales increase with the smaller fuel-efficient models benefitting the most.

However, despite displaying resilient and determined chararcteristics, total car sales since the beginning of 2009 are still down by 21.5% compared to the same period for 2008. This demonstrates the severity of the recession and also provides an indication of how low car sales would have been if the Car Scrappage Scheme had not been launched.

“The scrappage incentive scheme is having a positive impact but with consumer and business confidence still fragile, there remain significant risks ahead,” commented SMMT Chief Executive Paul Everitt, who also added “It is essential that these early signs of recovery are sustained into 2010,” he added.

Compare and contrast the month of August, which typically accounts for nearly 3.3% of annual new car registrations, whereas September typically takes up to 17% of new sales. Based on these historical sales figures, September will provide a key test and indicator for the motor industry’s future when the new ‘59′ number plates are introduced.

The EEF has recently issued a letter to the Chancellor Alistair Darling claiming the Car Scrappage Scheme had helped reduce the fall in UK car production while retaining skilled jobs. Director of policy, Steve Radley confirmed; “The success of the Car Scrappage Scheme has been clear for all to see by putting a floor under manufacturing recession and helping retain skilled employees.”

However, a caveat was also included – as the EEF stated it was uncertain consumers would continue with their demand for new cars if such scrappage incentives were to cease. It further added; “It is by no means certain that this positive trend will continue in the near future with consumer confidence still fragile and unemployment still rising. Failure to extend the (Car Scrappage) scheme before a stronger recovery is in place runs the risk of pulling the rug from under the sector, damaging supply chains and prospects for a better balanced economy in the upturn.”

As recently reported by the Car Scrappage Team, the Society of Motor Manufacturers and Traders (SMMT) has also called on the Government to extend the scrappage scheme. The SMMT was quoted last month as stating the £300m scheme fund was likely to run out by the end of October and has therefore called on the Government for an extension to February 2010. But a more startlingly estimation has been offered Deloitte, which claims the scrappage scheme fund could be all-but-gone within the next week.

Mandelson - No Promises

“If the scheme ends in October and is followed by a 2% increase in VAT in January it will be a serious blow to the British car industry that’s just getting back on its feet.” warns Paul Everitt, CEO – SMMT.

Executives from the motor industry met with Business Secretary Lord Mandelson last week and called for an extension to the Car Scrappage Scheme by increasing the Government provided subsidy by a further £200m. The initial Government sum which kick started the Scrappage Scheme in May was £300m and is forecast to run out in October.

The industry is warning that failure to provide further subsidy may result in workforces being forced back on to shorter working weeks with job security at risk.

Paul Everitt, Chief Executive of the Society of Motor Manufacturers and Traders (SMMT) was quoted to have said “Without an extension there’s a real risk of an abrupt slump in sales that will create further uncertainty for thousands of car workers with the likelihood of short-time working.”

A Department of Business spokesman confirmed a meeting was to take place, but said there were no plans to extend the Car Scrappage Scheme.

Since the Car Scrappage Scheme was launched in April 2009 around 200,000 new cars have been bought, which has helped to sustain employment within and connected to the motor industry.

The plea comes after the dealer announced half year profits of £8.6m, down from £13m last year. “The car scrappage scheme has helped, and we would like it to continue into next year” said CEO Ken Sturgeon, adding “We have around 3,500 orders from it so far, 55% of which has been delivered.

Revenue at the dealer for the 6 months to June 2009 came in at £870m, down from the £1bn reported for the same period last year. Lookers said the scheme had helped performance but that it remained cautious regarding the outlook for the new car market.

Sturgeon noted that whilst demand for new cars was down, “used cars, parts and after-sales are going really well.”

The Car Scrappage Scheme which launched in May of this year is due to end February 2010, or when the £300m put aside by the government for the scheme has been used up, whichever is the sooner. A 2.4% year on year rise in July of new UK car sales has been largely credited to the scheme.

However, over the half the funds have been used up already, suggesting the scheme will end later this year at the current run rate, several months short of the original expected end date.

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.