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BUDGET '09: Scrappage scheme predicted to be 50% effective

Date: 23 April 2009

The Government's new scrappage scheme could have only half the impact targeted by Government, with industry experts at J.D. Power predicting up to 150,000 extra units as a result of the programme.

The £300m scheme has enough funding to help the purchase of 300,000 new cars and vans at £1000 per unit, but at J.D. Power predicts that only half of the pot, which has to be matched pound-for-pound by participating manufacturers, will be used before the 31 March 2010 deadline.

"We believe this incentive will have a positive impact on sales during its operation, boosting sales, though this will be tempered by the impact on potential buyers of the poor economic environment and negative outlook for employment," said Pete Kelly, senior director of European forecasting operations at J.D. Power and Associates.