Darling seeks to lift car industry with scrapping scheme

LONDON (Reuters) - The government announced plans on Wednesday to boost the ailing car industry with a scheme to give motorists a 2,000 pound discount on purchasing a new vehicle when they trade in one more than ten years old.

Chancellor 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 welcomed the plan, saying it was "good news for consumers and will get people back into showrooms."

GERMAN SUCCESS