Scrappage scheme boosts German car sales

Figures from Germany have confirmed that scrappage schemes can significantly boost new car sales.

The German scrappage scheme has helped their national car industry record its highest levels of domestic sales since 1992.

The plan allows would-be buyers to trade-in their car if it's more than nine years old for €2,500 (around £2250) towards the purchase of new, more environmentally friendly vehicle.

Germany's new car sales increased by 40% in March compared with the same period in 2008.

Both Volkswagen and Audi have reported a better first quarter than last year, which they attribute to the scheme.

However, BMW has not followed in the footsteps of its counterparts, reporting a decrease in sales of 13%.

The scrappage scheme is likely to boost sales of smaller, greener cars from countries such as France, Italy and Japan rather than larger German cars.

Germany's car industry is also heavily dependent on export markets, which account for 80% of total sales - and amid worldwide recession, global sales are down.

The results from Germany will put increased pressure on Chancellor Alistair Darling to announce a similar scheme in the Budget on April 22.