The Government today announced a £100M increase to the vehicle scrappage scheme to build on the success of the scheme in boosting consumer demand.

The Department for Business, Innovation and Skills  said that Industry figures have reflected the positive impacts of the scheme both within and beyond the automotive sector, with manufacturing benefiting and the whole supply chain, from plastics and steel, to individual component manufacturers receiving a boost.

So far 227,750 orders have been placed through the scheme. The increased funding enables the scheme to fund a further 100,000 vehicles, bringing the total budget to £400 million and covering up to 400,000 vehicles in total. The extension continues as a Government and manufacturer partnership, with matched funding providing the £2,000 discount for each scrappage order.

Alongside the increased funding the Government will work with manufacturers to extend the benefits to van owners with vehicles over 8 years old rather than the current 10 year requirement. The scheme will come to an end in February 2010 or when the funding runs out, which ever is sooner.

Business Secretary Lord Mandelson said: “The sector has been strongly affected by the recession, but the scrappage scheme has delivered a boost to manufacturers and the supply chain. We have listened to the concerns of manufacturers and are increasing the funding of the scheme to £400m.

“But we must make sure that the help we do offer is targeted, limited and proportionate. This is not a blank cheque to the auto manufacturers but recognition that there is still a short term challenge to boost demand and confidence in the sector.”