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London - Britain announced plans on Wednesday to boost the ailing car industry with a scheme to give motorists a 2 000 pound discount on purchasing a new vehicle when they trade in one more than ten years old.
Finance minister Alistair Darling said in his annual budget the government would contribute 1 000 pounds to a new purchase, with the remainder funded by car companies.
The move, which follows the introduction of similar schemes across Europe, was given a mixed reception as car manufacturers had hoped the government would finance the entire subsidy and environmental groups had hoped it would be limited to the purchase of less polluting vehicles.
The AA also said it was disappointed by the government's plans to increase fuel duty by 2 pence a litre in September.
"Drivers will be delighted that a scrappage scheme has been given the green light, however motorists will be furious that he (Darling) has landed a fuel duty bombshell to pay for it," said AA president Edmund King.
The RAC said the scheme would consign a lot of "perfectly good, and relatively clean, vehicles to the dustbin."
Friends of the Earth transport campaigner Tony Bosworth said: "This is just an unnecessary subsidy to an industry that has consistently opposed tough legislation to cut carbon emissions."
The Society of Motor Manufacturers and Traders (SMMT) welcomed the plan, saying it was "good news for consumers and will get people back into showrooms."
German success
The government has put aside about 300 million pounds for the scheme, which will last until March 2010 and potentially allow around 300 000 consumers to benefit.
"The loss of consumer confidence and credit crunch has led to a sharp fall in vehicle sales around the world. In order to help the car industry and retail trade, I can announce that a scrappage scheme will be implemented next month," Darling said in his budget speech.
Sales of new cars have plunged in the economic downturn, requiring government bailouts of major manufacturers such as General Motors and Chrysler and leading to big share price falls in car dealers such as UK-based Inchcape.
New car sales in March jumped 40% in Germany after a similar scheme was introduced there, while in the UK they fell 30%.
The car industry supports around 800 000 jobs in Britain, with 27 car and commercial vehicle manufacturers producing around 1.75 million vehicles a year and generating turnover of about 51 billion pounds, according to the SMMT.
Shares in car dealers were higher following news of the scheme, which had been widely anticipated.
The SMMT said about 9.5 million cars and just under 1 million commercial vehicles would be eligible for the scheme.
