Car dealers in Northern Ireland have welcomed the government’s plan to extend its car scrappage scheme.

Ministers allocated £300m earlier this year for the scheme under which motorists receive a £2,000 discount when they trade in older cars for new models. The money is expected to run out within weeks, prompting pressure from groups including the Society of Motor Manufacturers and Traders for an extension that would continue to provide a boost to |manufacturers.

The move is likely to delight car makers and unions who have been pressing ministers for weeks to allocate more money to the scheme.

It is understood that enough money to cover an extra 100,000 cars and vans will be allocated by the government, which analysts believe will extend the programme by several weeks.

It is also believed that vans will be able to be traded in after eight years rather than the current 10 years.

Lookers, which owns the Charles Hurst franchise in Northern Ireland, said it would welcome any move to extend the scrappage scheme.

Peter Gordon, group marketing director of Charles Hurst, said: “Charles Hurst welcomes the news that the Car Scrappage Scheme is to be extended to benefit even more of Northern Ireland’s motorists.

“It has proven popular with customers, helping boost new car sales within the province, with many existing and new Charles Hurst customers taking advantage of the £2,000 subsidy to date.”

Sales of new cars dropped sharply in 2008 as a result of the drop in demand caused by the economic downturn. However, in recent months sales have begun to improve and Lookers said in its most recent results briefing that it expected the government’s car scrappage scheme to have a positive impact this year.

The scrappage scheme, and similar programmes in other countries in Europe, has also helped stabilise business for suppliers to the major car makers A number of car part manufacturers in Northern Ireland — including Ryobi, Calcast and Montupet — have been forced to cut jobs in the last year as the recession caused a drop in |demand for cars their customers |were making.

However, the most recent figures available showed new car sales in Northern Ireland rose in August compared with the previous year.

In Northern Ireland last month 4,037 new cars were registered, a rise of nearly 7% on August 2008. Smaller, more economical cars were the most popular during the month. However the year to date figure of 36,046 new cars represents a drop of nearly 20% on the same period of 2008.

Car makers, including Toyota and Ford, and unions have urged Chancellor Alistair Darling to extend the scheme to help save manufacturing jobs amid concerns that car sales would fall sharply without continued incentives to boost demand.

Manufacturing associations recently wrote to Mr Darling warning about the “clear risks” of ending the scheme.

The letter was also signed by heads of other groups including UK Steel, the Manufacturing Technologies Association and British Plastics Federation.

sross@belfasttelegraph.co.uk