There was good news for the motor industry yesterday as new car sales figures for October showed a sharp rise.

Statistics from the Society of Motor Manufacturers and Traders (SMMT) showed there were 168,942 new registrations, up 31.6% on October 2008.

The market had been expected to grow, after a 23% fall last October, but the recovery was better than expected. Demand was also helped by customers keen to avoid the VAT |increase due in January.

It was the fourth month of growth and SMMT said the Government’s scrappage scheme had provided a major boost for the industry.

Paul Everitt, SMMT chief executive, said: “October saw this year’s biggest monthly increase in registrations, with the successful scrappage scheme accounting for over 20% of them.”

The Government initially said it would pour £300m into the scrappage scheme. In September, it was announced that Whitehall would provide another £100m.

Mr Everitt said: “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.”

Private registrations almost doubled year-on-year and year-to-date volumes are now 3.3% above last year’s level, but fleet and business demand remains subdued.

For the year to date, registrations are down 12.3% on last year at 1,685,981. However, the SMMT said it expects new car registrations to continue to grow in the final two months of the year — ending 2009 just 200,000 behind 2008.

The Ford’s Fiesta was the best selling model in October, for the eighth time in 2009. Seven of the top ten best sellers in October were in the mini or supermini segment.

The next most popular models in October were the Vauxhall Astra, Ford Focus, Vauxhall Corsa and VW Golf.

SMMT said registrations of small cars had been boosted by the impact of new models, with the mini segment rising by 200% in October.