Scrappage scheme may end early

The scrappage scheme has undoubtedly kick-started new car sales in Britain, but its success could be its downfall as it could mean that the offer will end in just a few months.

In the first two weeks of the scheme, a massive 35,000 orders were placed for new cars under the scrappage plan. At that rate, the money set aside to incentivise car sales could run out by the end of the summer.

The British government has set aside a fund of £300 million to support the scheme, which allows for 300,000 buyers receiving £1,000 off the purchase price of a new car when they trade in a 'banger' that fits within its regulations. The car industry then stumps up a further £1,000 - though some car makers have been even more generous.

When announcing the introduction of the scheme, the government stated that it would run for as long as the funds allow it, or until the end of February 2010, though it increasingly looks like the scheme could be relatively short lived.

Despite predictions from some quarters that the money could run out as early as August, it's highly likely that there was a backlog of buyers awaiting the introduction of the scrappage scheme and there could yet be a slow down in sales following the initial blip.

Car makers are certainly hoping that the scrappage scheme money doesn't run out before September, which is traditionally a massively important time of year for new car sales, coinciding with the number plate change - this year from '09' to '59' plates.

One of the biggest beneficiaries of the scheme has been Hyundai, which has received about 9,000 orders in the first two weeks of the scrappage plan, representing a huge 750 percent rise over normal sales levels.

Tony Whitehorn, Hyundai UK's managing director, said "It has certainly been an amazing month for us, but we could have sold even more cars if we could have got them. Our dealers have taken more than 9,000 orders in the past four weeks - that's almost a third of the total number of cars we sold in all of 2008, and a massive 750 percent increase in the number we'd normally expect to see in a month.

"Our import centre at Tilbury is working flat-out for 24 hours a day to make sure the cars get out to dealers as soon as possible."

Shane O' Donoghue