The Government’s car scrappage scheme has given a lift to car dealership Inchcape in the first half of 2009.

The firm said the scheme – under which drivers get a £2,000 incentive to scrap old cars for new models – resulted in “some positive impact” on UK sales.

The scheme, which runs until next February, largely benefited mainstream marques, Inchcape said.

UK sales were down 24.6 per cent to £1?billion in the first half of the year – although this outperformed a 26 per cent fall in the wider new vehicle market, the firm added.

The firm expects the UK business to perform strongly in the second half as customers continue to take advantage of the scrappage scheme, as well as buy cars before the temporary VAT cut comes to an end in 2010.

But it also warned the market could dip next year when VAT benefits and the scrappage scheme are removed.

Inchcape’s underlying pre-tax profits of £65.4 million for the first six months of 2009 were down by more than half on the previous year, but beat expectations and lifted shares 11 per cent.

The firm said trading had been “resilient” as its broad geographical spread and heavy cost-cutting helped it to cope with the beleaguered market. Inchcape cut 2,000 jobs in the final three months of last year and announced plans to reduce a further 350 from European operations.

Inchcape added that margins and volumes had improved in its used car business, although it remains cautious over second-half trading.

But the company has strengthened its finances with a £234 million cash call on shareholders, which has helped slash net debt from £408 million at the end of last year to just £28 million.

Investec analyst David Jeary upgraded profits forecasts for this year by £12 million to £105 million.

He said: “The longer term potential for Inchcape is substantial when the global car market recovers.”