The SMMT have reported that new car registrations were up in August with the help of the scrappage scheme.

UK car sales have risen for the second consecutive month according to the latest data from the Society of Motor Manufacturers and Traders (SMMT), as the scrappage scheme builds momentum.

New car registrations rose by 6% to 67,006 units in August, up from a 2.4% increase in July, and small to medium petrol cars continue to be the top sellers. Mini and supermini segments have enjoyed extraordinary growth of 252.8% and 16.9% respectively.

Paul Everitt, SMMT Chief Executive, attributes the rise in new car sales to the success of the government incentivised scrappage scheme, but warned that the market is still in a volatile position. He said: “The scrappage incentive scheme is having a positive impact but with consumer and business confidence still fragile, there remain significant risks ahead.

“It is essential that these early signs of recovery are sustained into 2010.”

Despite the rise, new vehicle sales are still well below the units sold in 2007 and the market average monthly sales of 78,800 between 1999 and 2008.

Earlier this week the German scrappage scheme was hailed a roaring success as its government funding ran out. According to figures nearly two million motorists have scrapped their old car in exchange for a new one under the €5 billion (£4.4bn) scheme.

A similar picture has been seen in the US where its own “cash for clunkers” idea ran out of steam within a few months as customers flooded to car forecourts and used up the $3bn budget.

Many critics however, continue to suggest that car sales will begin to fall again without the scrappage incentive in place.