The final month of the scrappage scheme helped boost new car sales by an annual 26.6% to 397,383 in March, according to the Society of Motor Manufacturers and Traders. Cars bought under the £2,000 rebate scheme accounted for 12.2% of the monthly total.

“The UK motor industry has enjoyed a better than anticipated first quarter of 2010,” said SMMT chief executive Paul Everitt.

“A strong March performance was underpinned by the scrappage incentive and improving demand in the fleet sector,” he added.

But he cautioned that the coming months “will remain challenging” and, although headline registration numbers are expected to dip, underlying demand will continue to improve slowly.

The best-selling car in the first quarter was the Ford Fiesta.