Car sales surge 31.6% in October: trade

Sales of new cars soared by 31.6 percent in October as a result of the state-backed old-for-new scheme, industry body the Society of Motor Manufacturers and Traders said on Thursday.

New car sales rose 31.6 percent last month to 168,942 vehicles, compared with the same month of 2008, the SMMT announced in a statement. That was the fourth monthly increase in a row.

"October has seen this year's biggest monthly increase in registrations with the successful scrappage scheme accounting for over 20 percent of them," said SMMT Chief Executive Paul Everitt in the release.

"We have seen additional demand created by the extension of the scheme and customers wanting to avoid the VAT increase planned for January.

"Encouragingly, there has also been an increase in demand in the fleet and business sectors, which will be critical in sustaining recovery next year."

In September, the government had extended its popular car scrapping scheme, with additional funding for an extra 100,000 vehicles.

The initiative -- giving buyers a 2,000-pound discount when they trade in a car over 10 years old -- launched in April. The government and car manufacturers each contribute half of the cost.

Meanwhile, Value Added Tax (VAT) was cut to 15.0 percent last December to help boost consumer spending during the country's deep recession.

However, the VAT rate is set to return to its pre-recession level of 17.5 percent rate in January 2010.