Mandelson considers new-for-old car replacement plan

A car replacement scheme to boost the under pressure motoring industry could yet be considered by the UK government, according to business secretary Peter Mandelson.

Lord Mandelson said he is reviewing how the scheme is performing overseas before possibly recommending it as a tool for supporting car manufacturing.

On the motoring industry he said: "The car manufacturers are in a really bad way, they have been hit quicker, deeper and more severely than any other part of manufacturing in the UK economy."

Lord Mandelson said the industry had a strong future, but played an important role in the wider manufacturing sector and faced severe immediate difficulties. "I put in place a number of measures for car manufacturers and of course that will have an effect on the huge supply chain that supplies the sector," he said.

"And that's well over £2bn worth of loans and loan guarantees, but there may be other ways to help lift demand, including this scheme that's been operated in some other European countries where you trade-in old cars and get help in buying a new one.

"I am looking at the experience of other countries before reaching any conclusions, let alone starting discussing it with my colleagues in the government."

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