Scrappage scheme fails to take off

There was a 24.8 per cent slump in new car sales last month compared to the previous year, as the figures worsened from April, when sales registered a 24 per cent drop.

The numbers will come as a disappointment to the government, which hoped for more from its offer to pay customers £2,000 to scrap a car ten years older or more, in exchange for buying a new model.

The Society of Motor Manufacturers and Traders announced that 35,000 cars have so far been ordered through the scheme, while 134,858 new cars were sold in May.

The scrappage scheme started on May 18, so should have boosted the month's figures although delayed registrations may mean the impact is more gradual that hoped.

The scheme has been most attractive to middle-aged motorists agend between 45 and 60, with figures from the Retail Motor Industry Federation showing that the group made up 63.7 per cent of the total participants.

The interest from that age group helped private sales, which recorded a 13.8 per cent drop over 2008, however fleet sales, which are ineligible for the scheme, slid at a quicker rate, down 33 per cent. Corporate weakness is significant as the UK market is heavily reliant on company purchases.

The numbers did provide some good news for the green lobby, as smaller cars saw their sales jump 50 per cent in the month. And over two-thirds of cars bought under the scrappage scheme had engines between 1.0 and 1.3 litres, a figure which has positive implications for Co2 emissions.

WHAT THEY ARE SAYING
David Millward, Daily Telegraph: "Scrappage's encouraging start was, however, insufficient to prevent the industry suffering a fall in year on year sales for the 13th consecutive month... The industry believes that the tide could start to turn when the sales figures for this month are announced. It is believed that at the very least the decline will be much less marked."Paul Harrison, Sky News.com: "The Department for Business hailed the scheme an outright success by last week announcing 35,000 new cars sales in May under the scheme - that's 1 in 5 of all new cars sold. So why isn't that reflected in May's figures? Simple. A double whammy. Not only did the scheme start well over half way into May, but who in their right mind would buy a new car before May 18 knowing if they waited a couple of weeks, they could take advantage of a £2,000 reduction on their spanking new motor, assuming their old banger qualified?" ·