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British car production drops

LONDON, Jun 19 –  Car production in Britain slumped 43 percent in May from a year earlier, the Society of Motor Manufacturers and Traders said on Friday.

However May\’s drop was the smallest this year and followed a 55 percent fall in production during April on a 12-month basis, the SMMT said in a statement.

In a bid to kick-start Britain\’s ailing auto industry, the government has introduced a scheme whereby 10-year-old cars can be scrapped in return for a 2,000-pound (2,250-euro, 3,050-dollar) discount on a new model.

The government is contributing 1,000 pounds per car while the industry provides a similar amount.

The initiative is scheduled to last until February 2010 or until the 300 million pounds of government funding are used up. Britain\’s scheme is similar to ones introduced in France and Germany.

"The scrappage schemes in place across Europe are now beginning to have a positive impact, although the full benefits will take a little longer to flow down to companies at all levels in the supply chain," SMMT chief executive Paul Everitt said on Friday.

The global automaking sector is in crisis as consumers steer clear of buying vehicles amid the worst economic downturn since the 1930s.

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