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.

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.”

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.

Answer Back

Following our previous Car Scrappage article concerning the Times Online claims that manufacturers and dealerships are offering higher interest rate loans for some Scrappage Scheme deals, together with Parkers’ opinion that buyers would be better off avoiding the Scrappage Scheme altogether, the Car Scrappage Team decided to look further into these comments. And we weren’t impressed.

We specifically assessed the Times Online claims regarding Toyota’s Scrappage deal for the Avensis, and after speaking directly to Toyota it became clear the Times hadn’t done their homework. Furthermore, both the Times Online and Parkers’ failed to acknowledge several important factors including the benefits to the consumer regarding a ‘no-deposit’ Scrappage Scheme deal together with the many and varying offers across individual models rather than one ‘blanket’ Scrappage deal. Their analysis was anything but in-depth and generally misrepresented the manufacturer’s and dealerships. So we decided to put the story straight and clear up any potential confusion by publishing our own article. To read the full story click here.

Michael Valvo, the Press Relations Manager for Toyota has kindly provided the following official statement regarding the Times Online and Parkers claims and statements; -

“Toyota provides a range of competitive offers for all customers including those taking advantage of the Scrappage scheme. Different offers are sometimes available to different customers and there can be different terms and conditions but we are always open and fair about what offers are available and to whom, and consistently and clearly communicate the terms of our offers throughout all advertising. In relation to Scrappage specifically BERR are aware of and have approved our approach. ”

Michael Valvo
Press Relations Manager
Toyota GB / Lexus GB
Burgh Heath
Epsom KT18 5UX

The Car Scrappage Team have no affiliation with any manufacturer or dealership, however inaccurate claims and poorly researched statements by third parties need to be addressed so potential buyers are not mislead. The Car Scrappage Scheme is a brave strategy to keep the UK motor industry alive and running during one of the worst economic periods since 1930’s. The Scrappage Scheme financial assistance provided by the UK Government is far less than that being provided by the US and European Governments for similar initiatives. On that basis and in our opinion, manufacturers and dealerships are designing flexible and affordable deals for potential buyers through the Car Scrappage Scheme in very challenging trading conditions.

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Ford Focus zooms to No. 2

New car sales data published for May shows a shift towards the £10k or less tranche of the market in comparison to sales in April.

The Ford Fiesta, available at under £8k thanks to a £2,500 scrappage discount, topped the list for the Month of May, pushing the slightly more expensive Ford Focus down to 2nd place, which with a £4,000 reduction currently retails at under £10k.

Whilst the relatively inexpensive Corsa, Golf and Astra continue to occupy positions 3 to 5 respectively, the equally economical Peugeot 207 now resides at 6th in the table, one place up from April.

Top 10 Selling New Cars for May ‘09
May sales figures in brackets ()

1 Ford Fiesta – (7,040) around £9,795
2 Ford Focus – (6,693) around £12,295
3 Vauxhall Corsa – (5,525) around £10,000
4 Volkswagen Golf – (3,961) around £13,585
5 Vauxhall Astra – (3,549) around £14,865
6 Peugeot 207 – (3,103) around £8,740
7 BMW MINI – (2,650) Mini Cooper OTR Price around £13,715
8 Ford Mondeo – (2,647) around £12,895
9 Nissan Qashqai (2,629) around £12,200
10 Vauxhall Insignia – (2,602) around £17,130

Source: SMMT. *OTR = On-the-road. Above prices may vary so check details and finance with individual manufacturers and dealerships.

Fiesta Zetec - Small is popular!

Further proof of the flight towards the lower-cost market are the new arrivals into the top 10 of the BMW Mini and Nissan Qashqai, which have ousted the Audi A3 and Vauxhall Zafiri. Additionally, the Vauxhall Insignia which had been the 6th biggest new car seller in April now comes in at number 10 and despite a +£4k scrappage discount, currently retails above £13.5k.

New Arrival at No. 7 - BMW MINI

Outside of the top 10 Hyundai, who has made its i10 1.2 Classic available from under £5k, said sales in May rose 36.6% to 3,325 and new orders totalled 9,000. In an average month between 1,200 and 1,600 orders would be taken by the manufacturer.

And the top 10 for June is likely to reinforce this trend towards the less expensive end of the new car market as this will be the first full month in which the Car Scrappage Scheme has been in place.

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Whilst the purchase price of a top 10 best selling new car averages £12,522, it is also worth considering the following rate of car sales per day. The SMMT released UK car sales for May 2009 showing a major fall of 24.8% to 134,858 compared to May ‘08. This equates to an average mean figure of 4,350 car sales per day, which at an average top 10 price of £12,522 gives a total UK car sales figure for May of over £54m per day. Still seems a big number for a recession hit Britain? And this figure does not take into account finance costs, insurance and road tax, which would have probably raised this overall estimate.

The Society of Motor Manufacturers and Traders (SMMT) have revealed UK car sales for May 2009 plunging 24.8% to 134,858 compared to May ‘08. Furthermore, this is the 13th consecutive monthly decline in new UK car sales. Since the 1st January 2009, UK vehicle sales have totalled 748,691, which is down 27.9% year on year.

Top of the Premiership - Fiesta Zetec

The Ford Fiesta notched up the highest sales figures in May of 7,040, closely followed by her big brother – the Ford Focus with 6,693.

The Car Scrappage Team will be analysing May’s sales figures in further detail tomorrow. We think you’ll find it makes interesting reading.

Paul Everitt, chief executive of the SMMT was quick to remind the industry that the month of June will most likely show the true and full picture regards new car sales, as the Car Scrappage Scheme only officially commenced on 18th May ‘09. And Everitt continued by saying “We have seen an encouraging start to the scrappage incentive scheme with 35,000 orders being placed since it was announced, although it will take time to feed into registration figures”.

The Car Scrappage Team was one of the first media sources to report certain manufacturers and UK dealerships setting up their own scrappage schemes prior the official commencement. Moreover, some continue to demonstrate their entrepreneurial skills and fighting spirit by creating their own, highly incentivised initiatives, which are over and above the Government’s scheme.

Full Premiership sales, stats and analysis tomorrow.

According to Government statistics, 1 in 5 car sales had been purchased through the Car Scrappage Scheme since commencement on May 18th 2009, which was acknowledged as an encouraging sign by Paul Everitt, Chief Executive of the Society of Motor Manufacturers and Traders (SMMT). “With the scrappage incentive scheme fully operational, the industry is optimistic about the positive impact this will have on the market and on UK production facilities,” declared CEO Everitt, who also added “Despite the current difficulties, the UK must prepare for the return of global growth and government support for the industry is an essential part of the process”. Despite the initial increase in car sales, it will only be in July 2009 when June’s sales figures are released, that the industry could draw a full conclusion as to how effective the Car Scrappage Scheme is having on the UK car industry.

However, Nikki Rooke SMMT’s Head of Communications expressed concerns of emerging issues regarding difficulties in obtaining finance loans for the new car purchase, which was probably being influenced by the global credit crunch problems.

Anxiety continues to spread as U.S. car manufacturing General Motors’ announced that it may declare chapter 11 bankruptcy. Worries are escalating at UK manufacturer Vauxhall Motors, a GM subsidiary, as around 5,000 jobs are now at risk. Rumours are rife about the fate of Vauxhall’s plants in both Ellesmere Port and Luton. However, a deal has now been concluded in Germany where Canadian auto parts maker Magna will take over Opel, another European GM business, which secures tens of thousands of jobs. German Finance Minister Peer Steinbrueck told reporters that the takeover will be financed by a Russian bank in conjunction with Russian automaker GAZ.

We have previously highlighted on CarScrappage.co.uk that despite the entrepreneurial skills shown by car dealerships as they began creating their own scrappage deals while the Government procrastinated, it was essential the UK motor industry received the full support from a diligent Government. One of the main concerns now is whether the Government’s support may fatally prove too little and too late.

Check out Vauxhall deals at http://www.carscrappage.co.uk/car-scrappage-deals.

Any motorist failing to do so will need to provide evidence that they lived in both addresses, or else run the risk of being denied the total £2,000 subsidy. Last year a police study found that around three percent of cars on the road were registered to the wrong address.

And now uSwitch, a price comparison website, has found that those people who do participate in the scheme will find the benefit of the subsidy wiped out within 88 days due to the rapid rate of depreciation on new vehicles. New cars will on average drop in value by some 49 percent in their first year.

Furthermore, motorists should brace themselves for a hike in the cost of their insurance policy due to the increased value of their new car versus their old vehicle.

The industry however still had high hopes that the Car Scrappage Scheme will kick start demand for cars in Britain, much as it has done in Germany following the introduction of a similar scheme earlier this year.

The Society of Motor Manufacturers and Traders have reported a sharp rise in potential buyers, whilst Sue Robinson, Director of the Retail Motor Industry Federation said that dealers had reported a “marked increase in enquiries since the scheme was announced in the Budget in April.”