New car sales up by nearly a third

New car sales soared last month as buyers continued to take advantage of the Government's "cash for bangers" car scrappage scheme.

New registrations in October rose 31.6% compared with October 2008, with a total of 168,942 new cars being sold last month, the Society of Motor Manufacturers and Traders (SMMT) said.

SMMT chief executive Paul Everitt said: "October has seen this year's biggest monthly increase in registrations, with the successful scrappage scheme accounting for over 20% of them.

"We have seen additional demand created by the extension of the scheme and customers wanting to avoid the VAT increase planned for January.

"Encouragingly, there has also been an increase in demand in the fleet and business sectors, which will be critical in sustaining recovery next year."

The October increase was the fourth successive month that sales have risen. The first monthly rise - in July - followed 15 successive months of decline.

Despite the encouraging October figures, sales for the year to date - at 1,685,981 - are still down 12.3% on the January-October 2008 total.

The motor industry had expected last month to see a rise in sales as new registrations had slumped 23% in October last year. But today's rise was better than hoped for, with volumes almost 4% ahead of the 1999 to 2008 average for October.

Private registrations almost doubled last month and year-to-date private sales are now 3.3% up on last year's total.

The scrappage scheme, which has now been extended to include another 100,000 vehicles, has particularly helped the sale of small cars, with the mini sector rising 200 per cent last month. Alternatively-fuelled vehicle registrations were nearly 43% up in October 2009.

A Business Department spokesperson said: "Today's figures show that the Government's scrappage scheme has contributed to the fourth month of growth for new car registrations.

"This is good news for the industry and I am pleased that this Government scheme is providing the boost it was designed to deliver.

"Yesterday the £100m addition to the scheme was approved by Parliament. Alongside the new changes to the scheme, this will extend the positive impacts on the automotive sector and wider manufacturing into next year."

Adrian Tink of the RAC, said: "It's been a better couple of days of news for the UK car industry. These figures show why it was important to extend the car scrappage scheme. That said, the 31 per cent increase is against the very dark days of last October's figures.

"So while the figures are encouraging we shouldn't get too carried away just yet. The acid test will be how sales react when VAT goes back up and the scrappage scheme ends. The real worry is that car sales will dip once again once the crutch of financial incentives are removed."

Neil Greig, the Institute of Advance Motorists' director of policy and research, said: "New cars have better safety technology, such as traction control and European four or five star crash-test ratings, as well as lower emissions levels and reduced fuel consumption. They are also cheaper to insure and run.

"The scrappage scheme has not only put new cars on the road, it has taken old bangers off it. It will undoubtedly save lives in the future and, with fatalities costing the economy £1.8m each, it could represent a significant potential saving for the taxpayer, more than covering the costs of the scheme itself."