The government is likely to introduce an incentive scheme for car owners to scrap old vehicles in exchange for new ones
The move would probably involve a payment of £2,000 to trade in cars that are a certain number of years old.
The controversial plans are designed to boost demand for new cars and help struggling carmakers who are suffering during the recession.
A similar scheme in Germany has seen demand for new cars rise dramatically.
France and Italy have also introduced so-called car scrappage schemes to boost their beleaguered car industries.
Details of the UK scheme are likely to be announced in the Chancellor's budget on 22 April
"A scrappage scheme will provide the incentive needed and the evidence is clear that schemes already implemented across Europe do work to increase demand," said Paul Everitt at the Society of Motor Manufacturers and Traders (SMMT).
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