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Scrappage is providing big boost for car industry; AUTOMOTIVE.

The Government's scrappage scheme subsidising the replacement of old cars has given motor traders their best month for more than a year.

Those telling the CBI's distributive trades survey that their sales this month were better than those last June, all-but balanced those saying they were worse to give an adverse balance of only minus one per cent, the strongest outcome for more than a year.

It compares with minus 45 per cent in May, when buyers may have been holding off for the scrappage scheme to start and minus 16 per cent in April.

Taking sales of vehicles on their own, the adverse balance fell to minus seven per cent from minus 55 per cent in May and minus 129 per cent in April Sales of parts and accessories recovered, too, to record a positive balance of 29 per cent after breaking even in May.

A large minority of motor traders expect the recovery to continue in July. The adverse balance expecting their sales to be lower year on year fell to minus four per cent from minus 33 per cent.

A question about whether traders intend to place more orders with suppliers this month elicited a small positive balance after an unbroken run of minuses for the past year.

Similarly the balance describing their stocks as "high" in relation to sales fell to five per cent from 30 per cent in May, the strongest showing since June last year.

An overwhelming 83 per cent said their stocks were adequate.

"This survey shows the Government's new car scrappage scheme may be making a difference, with motor traders seeing their least negative sales for over a year," said Ian McCafferty, the CBI's chief economic adviser.

Among mainstream retailers, those saying their sales were down on the same month last year outnumbered those reporting an increase by 17 per cent for a second month. A small positive finding in April now appears to have been a freak result caused by the date of Easter. Supermarkets and other grocers outperformed all other retailers, as they have done since January, this time with a positive balance of 52 per cent.

Every other category registered a minus, with the sole exception of furniture and carpets. They reversed along run of substantial minuses with a positive balance of 19 per cent.

Andy Clarke, chairman of the CBI's distributive trades panel and chief operating officer of Asda, said: "June's weak sales figures show that business on the high street is not getting any easier.

"One consolation for retailers is, it is not getting any worse, and the dark days of the winter are behind us.

"It is too early to foresee a sustained pick-up in fortunes over the coming months, and the savviest retailers will be working hard to offer consumers the best possible value for money."
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Publication:The Birmingham Post (England)
Date:Jun 25, 2009
Words:471
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