Britain extends car-scrapping scheme

Britain will extend a popular car scrapping scheme with funding for an extra 100,000 vehicles, business minister Peter Mandelson said Monday, in a move welcomed by the troubled motor industry.

The news, announced in a speech to the struggling Labour Party’s annual conference, will likely be a vote-winner ahead of next year’s election which opinion polls currently show Labour is likely to lose.

“Our car scrappage scheme has been so successful the money is running out,” Mandelson said in a keynote speech in the English south coast resort of Brighton.

“Today I am extending our popular car scrappage scheme with extra money for an additional 100,000 cars and vans,” he told delegates.

The scheme which gives buyers a 2,000-pound (3,200-dollar, 2,300-euro) discount when they trade in a car over 10 years old was launched in April.

It was initially due to run until February 2010, but has been running out of funds.

The old-for-new scheme helped sales of new cars in Britain to rise 6.0 percent in August from a year earlier, according to industry body the Society of Motor Manufacturers and Traders (SMMT).

However, the SMMT also revealed last week that that British car production had plunged by 31.5 percent in August, compared with one year earlier.

Britain has been hoping that the 300 million pound (480 million dollar, 345 million euro) scheme proves as popular as one launched in Germany, where the government has stumped up around five billion euros.

Some 38 car manufacturers have signed up to take part in the British scheme, which applies to cars and light commercial vans. So far, orders for 227,750 new cars have been placed via the scheme. This will be extended to cover 400,000 vehicles.

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

The SMMT hailed Monday’s announcement as an “extremely important” step for Britain’s battered carmakers.

“Lord Mandelson’s announcement of an extension to the car scrappage scheme is an extremely important decision that will inspire consumer and business confidence,” said SMMT Chief Executive Paul Everitt.

“It will help to stimulate demand, giving more consumers access to it, and create a bridge to a period when economic growth is strengthened and more sustainable.”

Derek Simpson, joint general secretary of Britain’s biggest union, Unite, added that the announcement would help Labour’s prospects in a general election due by June.

The extension to the scheme “puts Labour back in the driving seat for the next election,” Simpson said.

BRIGHTON, England, AFP