Car insurance companies are ready to cover a number of new Ford and Honda cars, after the dealers announced they will now join the Government?s car scrapping initiative.

Ford had delayed taking part in the “cash for bangers” scheme, which rewards customers with a ?2,000 discount on a new car when they trade in a vehicle ten or more years of age, citing confusion over dealer-manufacturer and VAT arrangements.

However, these problems have now been resolved and Honda, who were in a similar position to Ford, have also joined the deal. Ford announced it had received 3,000 extra orders for new cars because of the initiative.

The scheme was launched by Prime Minister Gordon Brown and Business Secretary Peter Mandelson, but it was dogged by 11th hour problems with some car dealers.

New car sales have been in constant decline in the UK, with 11 consecutive months of falling figures. Manufacturers have been forced to make production cutbacks and shed jobs to cope with the downturn, which the car scrapping scheme is designed to reverse.

Copyright ? Press Association 2009

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