New car sales soared last month as buyers continued to take advantage of the Government's "cash for bangers" car scrappage scheme.

New registrations in October rose 31.6% compared with October 2008, with a total of 168,942 new cars being sold last month, the Society of Motor Manufacturers and Traders (SMMT) said.

SMMT chief executive Paul Everitt said: "October has seen this year's biggest monthly increase in registrations, with the successful scrappage scheme accounting for over 20% of them."

He added: "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."

The October increase was the fourth successive month that sales have risen. The first monthly rise - in July - followed 15 successive months of decline.

Despite the encouraging October figures, sales for the year to date - at 1,685,981 - are still down 12.3% on the January-October 2008 total.

The motor industry had expected last month to see a rise in sales as new registrations had slumped 23% in October last year. But the rise was better than hoped for, with volumes almost 4% ahead of the 1999 to 2008 average for October.

Private registrations almost doubled last month and year-to-date private sales are now 3.3% up on last year's total.

The scrappage scheme, which has now been extended to include another 100,000 vehicles, has particularly helped the sale of small cars, with the mini sector rising 200% last month. Alternatively-fuelled vehicle registrations were nearly 43% up in October 2009.