Sales of new cars in Portugal rose 39% in 2010 as consumers looked to buy new vehicles before a tax rise was implemented.

The rush in December sales – which were 62% up on the same month last year – helped the Portuguese auto sector register its best 12 months for five years.

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According to figures from the auto association ACAP, a total of 223,491 vehicles were sold in 2010. It added in a statement: “This increase in the market is essentially due to … a significant increase in the tax burden in 2011, and as a consequence an anticipation in demand.”

As Portugal struggles with a large budget deficit, the government has axed its “cash for clunkers” incentive programme, raised VAT to 23%, and increased taxes on new vehicles.

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