The program would see consumers offered up to US$4500 to trade in older vehicles on new, more efficient vehicles.
A similar program has been proposed locally by the Motor Traders Association of New South Wales to the Australian Federal Government.
The question is, can it get traction with industry and lobbying groups?
The MTA NSW proposal would see consumers offered up to $3000 to scrap their old cars and trade up to a new model, with the offer applying to vehicles 10 years and older.
According to MTA NSW?s estimates, about half of the 15 million vehicles on Australian roads are over 10 years old ? two million of which are worth less than the proposed trade-in amount.
MTA NSW?s James McCall said the scheme would help not only the manufacturers and benefit the environment, but would also help 103,000 small businesses and 318,000 workers that make a living from the car industry.
The program would require the government to earmark $4.5 billion, spread over three years, to cover the cost of the offer.
The Federal Chamber of Automotive Industries believes the scheme would serve no benefit in Australia, pointing to the Federal Government?s increased investment tax break, which rose from 30 percent to 50 percent in the last budget, as an example of an initiative already underway.
?The tax break will help stimulate the new vehicle market and support jobs in the industry,? FCAI Chief Executive Andrew McKellar said.
McKellar said that implementation of the British scheme ? which requires the trade-in payment to be covered in equal parts by the government and the industry ? could prove too expensive.
Environmental lobby group Greenpeace recently said in a letter to the EU Industry Commissioner Guenter Verheugen that the German program would bear no benefit to the climate, the environment, or road safety, and that it wasted taxpayers? money.
"These schemes are designed to encourage consumers to buy cars now, rather than later. But all they are likely to achieve is to cushion the sale slump today, triggering an even greater crash in coming years," the letter said.
Germany?s car scrapping program, which offers almost AU$5000 to consumers trading in their older vehicles, has been credited with a 40 percent sales rise in March, after a 21.5 percent increase in February.