New car sales jump by 6 %

One in four of August's 67,006 registrations were bought through the scrappage scheme, according to the Society of Motor Manufacturers & Traders.

It is the second month in a row that new car sales have risen following a 2.4% increase in July, the first for 15 months.

The real test will come this month following the launch of the new 59 plate.

The Society's chief executive Paul Everitt said it was clear the scrappage scheme - which gives buyers £2,000 when they trade in an old motor - was working and urged minis-ternot to stop it prematurely. Despite the pick-up, last month's sales were still more than 10,500 down on August 2007 and 15 per cent below the 78,800 market average between 1999 and 2008.

Mr Everitt said: "With consumer and business confi-dencstill fragile, there remain significant risks ahead. It is essential that these early signs of recovery are sustained into 2010."

But Howard Archer, economist at Global Insight, fears the true benefits to the UK economy could be limited.

He said consumers buying new cars will cut spending on other areas. Mr Archer also pointed out most cars bought under the scheme were foreign and warned sales were likely to fall back once the subsidy was withdrawn.