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Private Registration Plates Boost Car Sales
Sales of new cars jumped during the crucial month of September, providing the clearest signal yet that the Government's car scrappage scheme is succeeding.
Sales increased by 11.4% in September this year compared to the same month a year ago, according to figures from the Society of Motor Manufacturers and Traders (SMMT).
September traditionally accounts for a fifth of car sales throughout the year as the latest registration plates are issued. There were 367,929 new car registrations this September, boosted by the 'bangers for cash' scrappage scheme that rewards buyers with £2,000 when they exchange a vehicle that is more than ten years old with a new car.
The SMMT said that the Ford Fiesta was the best-selling car during September.
Sales have now turned the corner, going from an annualised fall of 30.5% in March to September's 11.4% gain. Business Secretary Lord Mandelson last month answered industry calls for the scheme to be extended from 300,000 to 400,000 after the success of the scheme meant that allocated funds were running dry.
Paul Everitt, chief executive of the SMMT, said: 'Market conditions remain challenging with demand being underpinned by the extremely successful scrappage incentive scheme.
'The extension of the scheme will help to sustain demand through the latter part of this year and into 2010. This will allow economic recovery to strengthen and safeguard valuable industrial capability.'
So far, the recovery in car sales has been driven by private buyers. These account for 25% of overall sales. The SMMT reported that fleet sales and purchases by businesses were still 13% and 11% lower, respectively, than a year ago.
These sales have not been boosted by the scrappage scheme but dealers hope that a gradual recovery in the economy, as well as a return of the higher 17.5% VAT rate at the end of this year, will prompt firms to spend on upgrading their vehicles.
This could provide another boost to overall sales which, despite the recovery this year, are still 10% lower than in 2007.