New car registrations rose by 57.6 per cent in November compared with last year, as the motoring industry prepares for the end of the “cash-for-bangers” car scrappage scheme introduced in May this year.
The scrappage scheme, which is due to end to end in February or when funding runs out, accounted for 21.6 per cent of the 158,082 vehicles registered last month, according to the Society of Motor Manufacturers and Traders (SMMT).
Paul Everitt, chief executive of the SMMT, said: “The increase in new car registrations in November reflects the positive impact of the Scrappage Incentive Scheme, customers avoiding the VAT increase in January and the very difficult conditions we experienced a year ago.”
Under the scheme, buyers of new cars or vans are eligible for a £2,000 discount if they trade in vehicles that are at least ten years old.
Mr Everitt has estimated that there is £125 million funding left for the scheme.
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He urged the Government to consider extending the closure deadline in its Pre-Budget Report next Wednesday.
Lord Mandleson, the Business Secretary, said this week that the car industry would have to cope with returning to “normal market conditions”, quashing hopes that the £400 million scheme might be extended.
The 57 per cent jump was a sharp increase compared with previous months.
Registrations rose 31.6 per cent in October, 11.4 per cent in September, 6 per cent in August and 2.4 per cent in July.
The increase was driven by private buyers, which jumped by 71.2 per cent year-on-year to 89,737 in November.
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Howard Archer, of IHS Global Insight, said: “There is significant debate about just how much overall the car scrappage scheme is helping the UK economy. Much depends to what extent the higher car sales are diverting away spending on other goods and services.”
He added: “The majority of the new cars being bought are being imported. This was a major factor leading imports to rise more than exports in the third quarter, thereby causing net trade to make a negative contribution to GDP.
“This is a major difference from Germany, for example, where a car scrappage scheme played a major role in helping the economy return to growth in the second quarter.”