Carmakers are anticipating a sales boost from a scrappage incentive launched in the U.K. on Monday.
Ford Motor Co. said it expects to sell 60,000 more cars because of the bonus, which offers buyers scrapping cars older than 10 years £2,000 (about $3,035) toward the purchase of a new model.
Hyundai U.K. said it has ordered 6,000 extra cars to meet anticipated increased sales. Nissan and Toyota are boosting production to meet higher demand for new cars.
The British government has allocated £300 million for a scrappage scheme, which is enough to fund 300,000 vehicles. The government covers half of the £2,000 incentive, the remaining 1,000 pounds comes from the manufacturer or dealers.
The U.K. scrappage program follows similar schemes in Germany, France, Italy and other countries.
"We have around 20 percent of the U.K market, so we would expect to take 20 percent of the additional sales from scrappage," said Oliver Rowe, Ford of Britain spokesman.
Ford had already taken 1,400 preorders before the launch of the scheme, a 15 percent increase in retail sales from May 2008.
Rowe said the additional orders would not lead to increased production at Ford's European plants, but it "keeps the plants running at the capacity they need to be at," Rowe said.
Hyundai U.K. spokesman Tom Barnard said orders increased by 400 percent in the week after the scheme was announced and 298 percent the following week.
"We think we will 10,000 more cars in the U.K this year because of scrappage," Barnard said. Hyundai sells about 30,000 cars a year in the country.
Barnard said most of the cars would be entry-level i10 mini cars and i20 small cars. "We are seeing a lot more people coming into our dealers. We have got new cars in the smaller end of the market, which is growing."
Nissan and Toyota are boosting production at their U.K. factories to meet increasing demand created by scrappage incentives.
Nissan expects to build 14,000 more cars than it originally planned at its Sunderland, England, factory in the coming months. The carmaker builds the Note, Micra and Quashqai cars at the plant.
At least half of the extra production will go to the U.K. market, Nissan said.
Trevor Mann, Nissan's manufacturing chief, said the company had seen more potential buyers visiting U.K. dealerships since the government announced a scrappage program.
"The full year forecast is still tough, but scrappage is a very welcome short term boost for the plant," Nissan UK spokesman David Swerdlow said.
Toyota expects the Aygo mini car and Yaris small car to be the main sellers because of scrappage bonuses, spokesman David Crouch said.
Crouch said the company has increased production slightly at its Burnaston plant in central England because of the European scrappage incentives. The plant makes the Auris compact and Avensis mid-sized cars.
Yaris production at Valenciennes in France has been increased because of higher demand. Non production days which had been planned at the factory have now been cancelled until the end of the summer.
Aygo production at Kolin in Czech Republic is not being increased because the plant already operates at its full annual capacity of 320,000 units.