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The 11.4% rise in new car sales provides the most compelling evidence so far that the market is recovering from the depths reached in early 2009 and that the Government’s scrappage scheme is succeeding in significantly boosting sales.
The scheme, which had the original allocation of £300m, was due to run out on February 2010. However, owing to an injection of an additional £100m the scheme will be able to accommodate 100,000 more cars and vehicles.
Last week's figures from the Society of Motor Manufacturers and Traders saw an increase in the number of cars produced for sale in the UK, where scrappage has raised demand - the scheme helped boost car sales by 28% in August alone.
The recession-busting scheme has been one of the most effective forms of subsidies to the car industry and has saved tens of thousands of jobs.
This scheme is also expected to see a surge in the instances of car insurance policies purchased in the future.
A 30% rise was recorded by the used cars segment making them more sought after as a result of the scheme.
Market conditions remain challenging with demand being underpinned by the extremely successful scrappage incentive scheme.
However the extension of the scheme will help to sustain demand through the latter part of this year and into 2010. This will allow economic recovery to strengthen and safeguard valuable industrial capability.