30 September 2009 | Jake Kanter

The government's decision to extend the car scrappage scheme could provide a "lifeline" to auto suppliers in the UK, experts have said.

Earlier this week business secretary Lord Mandelson announced that the programme will be increased after the government made £100 million more funding available.

It will enable more consumers to claim a £2,000 discount on a new car in exchange for scrapping a vehicle more than 10 years old.

Mandelson said: "The sector has been strongly affected by the recession, but the scrappage scheme has delivered a boost to manufacturers and the supply chain. We have listened to the concerns of manufacturers and are increasing the funding of the scheme to £400 million."

Marc Summers, auto director at business advisory firm KPMG, said the extension will help vendors stand on their "own two feet".

"The asymmetric benefit of the scrappage scheme has meant that OEMs (original equipment manufacturers) with small eco cars have benefited, and those who have been successful will be hoping that the long-term benefit of the scrappage scheme will produce a new generation of customers who are brand loyal for many years."

The decision will stimulate demand and inspire business confidence, added Paul Everitt, chief executive of the Society of Motor Manufacturers and Traders.