New car registrations continued to rise in October 2009.

The government-backed scrappage scheme has seen new car sales rise by 31.6% in October – the biggest increase this year.

According to the latest figures from the Society of Motor Manufacturers and Traders (SMMT), 168,942 new cars were registered last month – a 31.6% increase on October 2008.

The growth in new car sales has been partly attributed to the scrappage incentive scheme. The SMMT credits the scrappage scheme with more than 20% of the new car sales.

In anticipation of the planned VAT rise in January has also increased the demand for new cars.

Paul Everitt, SMMT Chief Executive, said: “We have seen additional demand created by the extension of the [scrappage] 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.”

Potential buyers can trade in cars older than ten years to receive a £2000 discount on a new car.

Similar schemes have been successful in Germany, France and the US.

The Ford Fiesta continues to be the most popular new car purchase in October and this year so far.

Demand for new cars is still, however, lower than last year. Over the first ten months of 2009, demand is down 12.3% or 236,790 units. Growth is expected to continue in the final two months of the year, ending 2009 at 1.9 million new units sold.