New car sales in the UK rose for a fourth successive month in October on the back of the extended car scrappage scheme as well as buyers wanting to buy a new car before the increase of Vat in January.

According to the Society of Motor Manufacturers and Traders (SMMT), the UK government scrappage scheme, where a 10 year old car can be traded for a £2,000 subsidy for buying a new model – accounted for a fifth of sales in October.

New car registrations were up 31.6 per cent in October to 168,942 units although year-to-date registrations at 1,685,981, down 12.3 per cent.

It was the fourth month of growth sustained by the scrappage incentive Scheme where private demand rose by 86 per cent in the month, aided by the positive impact of SIS, said SMMT.

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

''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,'' he added.