The UK car scrappage scheme, which had stemmed the pace of decline of car sales for three consecutive months, faltered in August as sales fell by a sharp 31.5 per cent.

The UK government's £300-million car scrappage scheme, introduced in May 2009, offered consumers a £2,000 rebate for scrapping a 10-year old car for a new model, had helped to puch up new car sales for three consecutive months starting from May itself. (See: UK car sales hint at recovery despite recession)

The UK Society of Motor Manufacturers and Traders (SMMT) said that car production dropped 31.5 per cent in August and 44.6 per cent for the year to date.
Out of the 56,737 cars made last month, 37,564 were exported, while 19,173 was sold in the domestic market.

Cars built for the UK market reached a 56 month high of 33.8 per cent and commercial vehicle output registered the smallest drop of the year with a decline of 48.5 per cent in August.

''The scrappage incentive scheme has had a positive impact on car production with one in three cars built in the UK last month for the home market and total volumes starting to stabilise,'' said SMMT chief executive, Paul Everitt.

''However, underlying demand remains weak and the recovery is still extremely fragile. A continuation of the scrappage incentive scheme through to the original close date of 28 February 2010 would help to sustain growth and bridge uncertainties associated with the ending of VAT discount.''