UPDATE 1-UK seeks to lift car industry with scrapping scheme

* Scheme offers 2,000 stg subsidy on new purchase
* Motorists have to trade in a car over 10 years old
* Car industry to pay half the subsidy
* Motoring groups give mixed reaction, slam fuel duty hike

(Adds more reaction)
LONDON, April 22 (Reuters) - Britain announced plans on
Wednesday to boost the ailing car industry with a scheme to give
motorists a 2,000 pound ($2,914) discount on purchasing a new
vehicle when they trade in one more than ten years old.
Finance minister Alistair Darling said in his annual budget
the government would contribute 1,000 pounds to a new purchase,
with the remainder funded by car companies.
The move, which follows the introduction of similar schemes
across Europe, was given a mixed reception as car manufacturers
had hoped the government would finance the entire subsidy and
environmental groups had hoped it would be limited to the
purchase of less polluting vehicles.
The AA also said it was disappointed by the government's
plans to increase fuel duty by 2 pence a litre in September.
"Drivers will be delighted that a scrappage scheme has been
given the green light, however motorists will be furious that he
(Darling) has landed a fuel duty bombshell to pay for it," said
AA President Edmund King.
The RAC said the scheme would consign a lot of "perfectly
good, and relatively clean, vehicles to the dustbin."
Friends of the Earth transport campaigner Tony Bosworth
said: "This is just an unnecessary subsidy to an industry that
has consistently opposed tough legislation to cut carbon
emissions."
The Society of Motor Manufacturers and Traders (SMMT)
welcomed the plan, saying it was "good news for consumers and
will get people back into showrooms."

GERMAN SUCCESS
The government has put aside about 300 million pounds for
the scheme, which will last until March 2010 and potentially
allow around 300,000 consumers to benefit.
"The loss of consumer confidence and credit crunch has led
to a sharp fall in vehicle sales around the world. In order to
help the car industry and retail trade, I can announce that a
scrappage scheme will be implemented next month," Darling said
in his budget speech.
Sales of new cars have plunged in the economic downturn,
requiring government bailouts of major manufacturers such as
General Motors and Chrysler and leading to big share
price falls in car dealers such as UK-based Inchcape .
New car sales in March jumped 40 percent in Germany after a
similar scheme was introduced there, while in the UK they fell
30 percent.
The car industry supports around 800,000 jobs in Britain,
with 27 car and commercial vehicle manufacturers producing
around 1.75 million vehicles a year and generating turnover of
about 51 billion pounds, according to the SMMT.
Shares in car dealers were higher following news of the
scheme, which had been widely anticipated.
At 1415 GMT, Inchcape shares were up 11.5 percent at 17
pence, Pendragon was up 1.6 percent at 15.75 pence and
Lookers up 1.9 percent at 41 pence.
The SMMT said about 9.5 million cars and just under 1
million commercial vehicles would be eligible for the scheme.
(Reporting by Mark Potter; Editing by Simon Jessop and Andrew
Macdonald)
($1=.6863 Pound)
((mark.r.potter@thomsonreuters.com; +44 20 7542-2943; Reuters
Messaging: mark.potter.reuters.com@reuters.net))
Keywords: BRITAIN BUDGET/CAR SCRAPPAGE

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