Contrary to expectations, car sales rose considerably during January. The SMMT claimed that the scrappage scheme had a strong impact on vehicle sales, and with the scheme now extended for another month, many buyers may choose now to purchase a new car .

The car scrappage scheme will now be extended until the end of March, allowing motorists to trade in their old car for a new vehicle and receive a 2,000 pound discount. The scheme has driven new car sales up for each of the past seven months.

Paul Everitt, the chief executive of the SMMT, reportedly commented: Industry expects another difficult year, with the availability of finance, consumer confidence and sustaining demand post-scrappage key to performance in the second half of the year.