“New car registrations continue to decline and although
government recognises the strategic importance of the UK motor
industry, urgent action is still needed,” said Paul Everitt, SMMT
chief executive. “Other European countries have been proactive in
assisting their automotive industries and it is imperative that UK
government increases the pace in responding to industry proposals
for a scrappage scheme and access to finance and credit.”

One of the concerns that the government must have is that a
scrappage scheme will serve to help importers rather than UK
manufacturers, with the majority of their production going to
export.

Sales of new German cars jumped by almost a quarter in February,
as a cash bonus for scrapping old cars encouraged consumers to buy
new ones. The main reason is a €2,500 (£2,236) government incentive
for car owners to get rid of their old vehicle and buy a new
replacement. But exports of German cars slumped by more than half
during the month.

• Any UK government plans to help the British automotive sector
must focus on manufacturing and not retailing, believes Professor
Garel Rhys, president of the Institute of the Motor Industry.
Professor Rhys believes it could be 2013 before full recovery is
attained.

“Nurturing of the UK auto sector in these conditions becomes an
economic imperative,” he said.

• The used car market has seen steep rises in values, according
to Cap Black Book. Used car dealers are reporting strong retail
demand and paying up to £500 more for a three year-old volume car
than at the start of the year. The March edition of Black Book sees
late-plate cars “especially strong”, because the weak new car
sector has reduced the supply of used vehicles.

“A notable feature of the current market is increased demand for
stock from franchised dealers in particular who would normally rely
heavily on the influx of part-exchange cars from new vehicle sales,
along with nearly new cars generated by the pursuit of new car
volume bonuses,” said Cap.

• The CBI’s latest economic forecast, published this week,
predicts that the recession will last throughout this year with a
recovery building through 2010. Unemployment is predicted to peak
at just over 3 million in early 2010 while business investment will
be scaled back sharply this year and household consumption
contracts.

• Britain’s beleaguered car industry has already received
taxpayer handouts worth £527.5 million, according to figures
obtained from the Department for Business Enterprise and Regulatory
Reform. And that is before a penny of the £2.3 billion bailout
package announced last month by business secretary Lord Mandelson
has been distributed.

• Vehicle data provider HPI said that 41 percent of new car
buyers say the cut in VAT is ‘unlikely’ to make them buy in 2009.
The figures suggest that the government’s 2.5 percent VAT cut has
failed to get Britain spending, especially as the reduction has the
greatest impact on big-ticket items such as cars.