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Car manufacturers make hay while the sun shines

The UK government has today announced that just under 155,000 cars have been acquired by UK motorists under the car scrappage scheme. This is the scheme which allows vehicles aged 10 years or over to be scrapped in exchange for a £2000 discount on a new vehicle. The idea is that by scrapping the less efficient vehicles and replacing them with more efficient vehicles there will be a significant improvement to the environment in due course.

The UK government has promised to underwrite the purchase of 300,000 cars in UK which would indicate that the scheme itself is just over the halfway point. There is no doubt that it has had an impact on new car sales although there is some suspicion that car manufacturers have increased prices on some models in order to reduce the impact of the discount, which is 50% funded by UK car manufacturers.

Whether or not the impact on the UK car market will continue into the future, as and when the scheme ends, is debatable but there is no doubt that the vast majority of UK car manufacturers are "making hay while the sun shines". It will be interesting to see what happens when the scheme ends and whether the UK government would consider a potential extension.

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