UK car sales rise in Aug, scrappage scheme helps

New car sales in Britain rose for a second month running in August as the government's "cash for bangers" scheme lured cost-conscious buyers on to forecourts.

The Society of Motor Manufacturers and Traders said sales rose an annual 6 percent to just over 67,000. That built on a rise of 2.4 percent in July and was the sharpest gain since October 2007.

Driving the improvement were private sales and smaller vehicles, reflecting the popularity of the government's car scrappage scheme. The scheme, introduced in May, gives drivers 2,000 pounds to trade in a car more than 10 years old against a new model.

Car scrappage scheme have boosted vehicle sales around the world. Sales in Germany, Europe's largest market, leapt 28 percent last month. The United States, France and Japan have also reported an significant increase.

Industry groups, however, are worried sales could flounder again unless incentive schemes are extended.

"The scrappage incentive scheme is having a positive impact but with consumer and business confidence still fragile, there remain significant risks ahead," said Paul Everitt, SMMT chief executive said Paul Everitt.

Britain's scrappage scheme is due to end in February 2010 but could end sooner if the 300 million pounds the government has earmarked for the project is exhausted.

More than half of the funds have already been spent and the government has said it has no plans to extend the scheme.

"We are please to see the scrappage scheme is delivering against its aims," a government spokesman said. "People should get their orders in quickly as this scheme will not last forever."

August is traditionally a quiet month for car sales as buyers wait for number plates to change in September.