'Offer incentives to buy cars' plea; Nissan asks for Government help.

Byline: William Green Political Editor

NISSAN is urging the Government to offer cash incentives to get consumers buying new cars amid warnings the automotive industry is facing "a state of emergency".

The carmaker - which has a major plant in Washington - said the case for a "scrappage" scheme was supported by the news that it has enjoyed a boost in export orders after such a programme was introduced in Germany.

The developments come after Nissan announced it was cutting more than a thousand jobs in its local factory - with more workers made redundant in the supply chain - in the face of a global sales slump.

But industry sources fear the crisis could significantly worsen and leave the industry "hollowed out" and unable to compete internationally unless ministers takes decisive action now.

The Journal also understands there are industry "frustrations" that the Government has been too focussed on saving banks and not enough on the "real economy".

And Chancellor Alistair Darling is now under pressure to use his upcoming Budget on April 22 to help the British automotive industry come through the recession.

The Society of Motor Manufacturers and Traders (SMMT) wants new car tax hikes dumped and a scrappage scheme to encourage consumers to get rid of old cars and buy new vehicles.

And the SMMT has suggested to ministers that owners of cars and vans over nine years old could be encouraged to scrap them by offering pounds 2,000 towards new or one-year-old vehicles.

The cost would be offset by more sales increasing VAT revenues for the Government, according to the SMMT.

Improving access to credit for the finance arms of car companies, so they can provide affordable vehicle loans to consumers, is another key demand from the SMMT.

Paul Everitt, chief executive of the SMMT, said: "The UK motor industry is reaching a state of emergency and the rate of Government action is crucial to the future success of the sector.

"The UK is home to highly-productive and globally-competitive plants producing vehicles that win market share around the world.

"Government has an opportunity to support UK manufacturing as a key global player in the low carbon future, but immediate action is needed to protect the country's industrial capability."

He added: "Government must use the Budget to boost consumer confidence and kick-start the market with a scrappage scheme to encourage private sales and tax changes to generate business sales."

A Nissan spokesman said: "We have had some increased demand as a result of the German scheme.

It supports the case for schemes in other countries, including in the UK. Anything to improve consumer demand for new cars has got to be a good thing in the current economic climate."