New car registrations in Germany rose again in July, up almost 30% over the same month last year to nearly 340,000 units as motorists continued to take advantage of government incentives to scrap old cars and buy new ones.

Sales for the first seven months of the year were 26.6% ahead year on year at almost 2.4m units according to the KBA motor vehicles agency.

July sales were once again led by small models benefiting brands such as Fiat, Peugeot, Renault and Skoda.

The VDA carmakers association said car production in Germany seemed to have stabilised but added that the industry still faced a long uphill climb before sales and output reached the levels of 2007 and 2008.

Germany’s vehicle scrappage scheme was launched by the government in February providing a subsidy of EUR2,500 (US$3,598) to scrap cars at least nine years old in exchange for any new model. The scheme runs until the end of 2009.

Elsewhere in Europe, scrapping schemes have also had positive effects. France, up 3%, and Italy (+6%) reported increases in July car sales on Monday while Spain’s decline slowed to 11%.