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New car registrations in the UK rose 6% year-on-year in August on the back of the positive impact provided by the UK government’s scrappage incentive scheme.

August marks the second successive month of growth in the UK car market and builds on the 2.4% gain in July.

However, an August car market of 67,006 units remains low when put in historical context; it is still over 10,500 units below August of 2007 and 15% off the 78,800 market averaged between 1999 and 2008.

“New car registrations in August increased for the second successive month, providing welcome news for the UK motor industry. 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,” said Paul Everitt, SMMT chief executive.

Car sales to private buyers and sales of small cars were again up strongly in August, reflecting the scrappage scheme boost.

Private demand rose by 50.5% in August, albeit against a weak 2008 performance.

The mini and supermini segments once again showed surging growth, up 252.8% and 16.9% respectively in August. Sports and dual purpose segments also recorded strong growth, up 25.8% and 10.1% respectively, in the month.

The Ford Focus was the best selling model in August, ahead of the Fiesta and Hyundai i10. Ford’s Fiesta was the best seller over the year-to-date.  

New car registrations over the first eight months of 2009 totalled 1,149,110, down 21.5% on last year. Over the past 12 months volumes have fallen by 530,125 units over the previous twelve months.

With the UK car market responding well to the scrappage incentive and concerns about the underlying fragility of the economy, there are calls for more funding for the scheme – which is likely to be out of funds within two months.

“With car sales continuing to grow as a result of the vehicle scrappage scheme, Government must consider an extension to enable consumers and business to gain full benefit from the initiative,” said Sue Robinson, Director of the Retail Motor Industry Federation (RMIF), representing the UK’s new car dealers.

According to Robinson, the scrappage scheme is having a positive effect on the whole market: “Car dealers are reporting that the scheme is continuing to provide a halo effect for overall car sales, and is helping increase footfall into showrooms by general buyers as well as scrappage buyers.”

Robinson adds: “The scheme has been highly successful, but with the retail economic climate still fragile, demand still growing, and an increase in VAT scheduled for 1 January 2010, an extension of the initiative is vital.”

See also: GOLDING’S TAKE: The bigger car retailers are, the harder they fall