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Will the car scrappage scheme save the motor industry?

As the government receives its first pat on the back for some time, in relation to the early success of the car scrappage scheme, there are still concerns about the long-term viability of the UK car manufacturing sector. It is no surprise that the collapse of General Motors in the US has placed significant pressure on its European subsidiaries, many of which have been put up for sale.

As we covered in one of our posts yesterday, there is significant concern in UK regarding the government's refusal to put hard cash on the table as the GM European subsidiary is carved up. As Germany continues to pull the strings, with over 50% of GM Europe based in Germany, there are fears that the UK market will miss out and thousands of jobs could be lost. The Vauxhall subsidiary is the main concern in UK and while the UK government has been very vocal, at least in public, regarding its support of the operation there are fears for the short term.

So while the U.K.'s scrappage system will offer short-term respite for UK car retailers there are concerns about what happens when the scheme is over and demand is expected to return to normal.

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