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Will the UK car industry survive the end of the scrappage scheme?

Over the last few months there has been a significant increase in the number of new cars sold in the UK as a direct consequence of the UK government's car scrappage scheme. The ability to scrap cars aged 10 years and over and receive up to £2000 for a new car has caught the attention of many motorists in the UK and led to a large spike in the sale of new cars. However, is this recovery to be short lived?

The UK government has put aside a specific amount of money with regards to the car scrappage scheme and once this budget has been used the scheme will then close. There are growing concerns within the UK car industry that as and when the scheme is closed we could see, and probably will see, a significant fall in the sale of new cars. However, there are hopes that by the time the scheme does close, which is forecast for early 2010, there should be an increase in natural demand for new cars in the UK.

There is also concern within the UK car industry with regards to the UK government and various finance promises which have yet to materialise. The car scrappage scheme has effectively allowed them to paper over the cracks in the short term but there are longer term issues to resolve.

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