The SMMT has written to business secretary Lord Mandelson asking for an extension to the scrappage scheme, which is otherwise predicted to end in November. SMMT is asking for the scheme to be extended through to the original closing date of the end of February 2010, to counter the likely negative impacts of a return to the higher rate of VAT and the introduction of the first year VED rates. After 15 months of consecutive decline in the new car market, the scrappage incentive scheme has reignited demand, says the SMMT, resulting in year-on-year growth in July and August and a dramatic cut in the rate of decline in vehicle production.

Since it began over 100,000 new vehicles have been registered under the scrappage scheme, with an order bank of a further 100,000 suggesting the scheme will run out of funding in late October/early November. 76 per cent of cars bought under the scrappage scheme were classified in the Mini or Supermini segments.

SMMT now forecasts the new car market to end 2009 at 1.85 million units, above pre-scrappage forecasts but well below the 2.47 million pre-recession five year average. One fifth of the cars registered were either built in the UK or have an engine produced here.