New car sales have increased 31% in October compared to the same month last year, according to figures released by the Society of Motor Manufacturers and Traders (SMMT).

There were 168,942 new cars registered last month, up 31.6% up on the same month in 2008.

''Encouragingly, there has also been an increase in demand in the fleet and business sectors, which will be critical in sustaining recovery next year,'' said SMMT chief executive Paul Everett.

The SMMT have stated that the government's scrappage scheme - which gives consumers £2,000 off a new car if they trade in a car that is at least ten years old - is responsible for around 20% of the month's new car sales.

The government recently announced the extension of the car scrappage scheme by injecting an extra £100m into the initiative. The scheme was originally scheduled to end by February or when the £300m the government had allocated the initiative ran out.