City & Corporate: In the news - Auto sector

Bring us up to speed

More than 35,000 new cars have been bought through the UK Government's new scrappage scheme since its April launch. One in five of those who bought new cars took advantage of the £2,000 discount for scrapping vehicles more than ten years old. The news is a further fillip to the industry, already boosted by Canadian-Austrian auto firm Magna International reaching an agreement on its rescue plan of GM Europe, owner of Opel and Vauxhall. The only fly in the ointment for British car manufacturing is that only about 20-25 per cent of the new vehicles were made in the UK.

The reaction?

The industry pushed the government hard to agree to the scrappage scheme, so any moaning about its results would be rather churlish. The news was welcomed by car industry bodies and the Department for Business, Enterprise and Regulatory Reform itself. The reaction to the rescue of Vauxhall was one of utter relief, after Fiat had pulled the plug on a potential deal.

Who are the main PR players?

The Society of Motor Manufacturers was instrumental in getting the scheme approved and arguing the industry's corner in the UK.

What happens next?

Britain's car industry has suffered from 11 months of sliding sales - before the start of the scrappage scheme the industry saw a decline of 56 per cent in car production year on year. The strong start of the scrappage scheme is a step in the right direction. However, conditions remain grim and the news that the Government's scrappage funds are already ten per cent depleted means the scheme could run out of money by the end of the year. Also European car manufacturers will have to ensure they keep the public on-side.

28.5% - Fall in sales of new cars in first four months of 2009.

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