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UK car industry in disarray

Figures showing a 51.3% slump in car manufacturing in the UK in the year to March 2009 have perfectly highlighted the ongoing difficulties being felt by the sector. Coming on the back of February figures which showed a 59% fall for the 12 month period it appears as though the UK car economy is in a dire situation but possibly showing signs of stabilisation.

Many car manufacturers are clinging to the hope that the government's scrappage allowance will see a significant boost for the new car industry in the short to medium term and increase vital cash flow in the industry. However, the £2000 allowance given to those scrapping old uneconomical cars can only be used to purchase cars on a closed list. There are concerns that if somebody was in possession of a car which was effectively ripe for scrapping, how would they be able to afford the balance required for a new high efficiency car?

There is even talk of companies such as Vauxhall being up for sale with Italian car manufacturers and others around the world said to be interested. This could place UK jobs at significant risk as any new owner would be looking to consolidate the business, reduce costs and improve efficiencies in readiness for the eventual recovery whenever this may be.

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