New car registrations rose by 29.8% in January to 145,479 units, according to the Society of Motor Manufacturers and Traders (SMMT).
This means car sales have risen for a seventh successive month.
The scrappage scheme continued to boost market, accounting for 17.8% of sales, despite return to 17.5% VAT on 1 January.
“The 29.8% increase in January new car registrations provides a better than expected start to 2010 for the UK motor industry,” said Paul Everitt, SMMT chief executive.
“Scrappage continues to lift demand successfully and today’s announcement of a continuation of the scheme to the end of March will allow the maximum number of people to benefit from the budget that’s still available.
“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, but signs of recovery in the fleet and business sectors are encouraging,” he concluded.