The scrap car recycling industry is facing a difficult period due to low demand and depressed prices, according to leading salvage operator Universal Salvage.

Ian Gaskin, Universal Salvage environmental services director, said: “If the Government's green credentials are as good as they say, they should use tax breaks and other incentives to encourage manufacturers to use recycled materials. At the moment, there is a lot of stick but not much carrot.”

The problem, though widespread across industry, is especially significant in the motor sector, which scraps nearly 9m cars a year in the EU.

Within five years, carmakers will be responsible for recycling or recovering 85% of the vehicle's weight. Around 75% of the vehicle's average weight is metal, which is comparatively easier to recycle than non-metallic parts.

The remaining weight is mostly tyres, glass and plastics. “The situation will get tougher by January 2015, when 95% of the weight must be recycled or recovered,” said Mr Gaskin. “This is a real headache for the automotive industry, yet with some incentives it could be turned round into a real opportunity.

“Since car manufacturers will, in future, be responsible for the disposal of their vehicles, they could help themselves and the rest of the recycling industry by making vehicles using recycled materials and therfore stimulate demand in the market.”

Universal Salvage handles more than 140,000 vehicles a year for insurers and fleet operators. Its end of life vehicle processing facility in the UK, accredited by the Consortium for Automotive Recycling, transforms rubber, foam, plastic and glass into items as diverse as garden furniture, drinking glasses and playground equipment.