The scheme which launched in May is due to end next month. The SMMT has written to business secretary Lord Mandelson urging it be extended to February 2010 to counter the negative impacts of the return of VAT to the higher rate of 17.5%.
SMMT chief executive Paul Everitt says: “Consumer confidence is still weak and recovery remains extremely fragile. Avoiding a relapse in demand is critical to the UK economy and an extension to the scrappage incentive scheme, which has already proven its credentials as a cost-effective support mechanism, will ensure a more stable outlook for vehicle demand.”
The car scrappage scheme is part of the government’s plan to rally the struggling car industry. The scheme has boosted consumer demand for new cars and halted the decline in vehicle manufacture in the UK.
Under the programme, motorists are awarded a £2000 incentive to trade in an old car for a newer, greener model.