The British Vehicle Rental and Leasing Association has urged Ministers to introduce grants for drivers handing in vehicles to be scrapped that are over 10 years old.
In its submission to the Government following the pre-Budget Report, the BVRLA said that although drivers should still have a choice over the car they use, they should be encouraged to move to cleaner technology.
Director general John Lewis said: 'We are not trying to be definitive on the shape of the system, but if the Government is serious about making inroads to cut emissions, then it should help drivers scrap old cars. It could offer a grant if the driver is then moving to a new car.'
Manufacturers have also criticised the Government's attempts to encourage cleaner cars. A spokesman for Mitsubishi said: 'Some of the worst polluting older vehicles will remain on the road with a lower annual road fund licence. Small does not mean clean as far as vehicle engines go.'
The industry has been campaigning for several years for a scrappage scheme to help clean up the environment, with the Society of Motor Manufacturers and Traders among the most vocal campaigners.
But there have been warnings that the scheme must be a long-term project to avoid a sudden one-off peak in demand for used cars.
Lewis added: 'There would also be benefits for road safety, as newer cars have better safety systems that could help avoid accidents.'