The UK Government should consider a car scrappage scheme to help protect the country’s industry, according to several leading car makers.

Senior figures from Vauxhall have said some stimulus is needed to revive the market.

The effect of the coronavirus restrictions has been devastating for the car industry. Virtually all production was halted around Europe and beyond, and March saw the worst new car registrations figures since 1946. New car registrations were down 97 per cent to just 4,321 as dealerships were forced to close.

Dealers in England have been allowed to resume remote sales and “click-and-collect” deliveries of new cars but industry leaders have said the market needs government intervention to help it recover.

The PSA Group, which owns Vauxhall, has confirmed it is in talks with the Government about the possibility of a scrappage scheme.

Alison Jones, managing director of PSA, told BBC Newsnight that a CO2 emissions-based scrappage scheme was being discussed but suggested it should focus on new cars in lower price brackets, with industry and the Government sharing the costs. She also told Car Dealer that delaying a decision could damage the new car market. She said: “‘The first of July was a suggestion and is linked to the September car market, but what I would say is that any decision needs to be made sooner rather than later, because if customers think there is a stimulus package coming then that won’t help us in getting the industry started.

“If we’re coming out of lockdown there will be some pent-up demand… so you might think that there will be a little rally, but then it will get really difficult.”

A previous scrappage scheme was run in 2009 to help stimulate the car market after the financial crisis. It gave drivers £2,000 towards the cost of a new car if they scrapped an older model and helped to drive 400,000 sales in 10 months.

Calls to repeat the scrappage scheme in recent years have met with resistance amid fears they might not be cost-effective.