Sales of new cars in Britain rose by six per cent in August thanks to a government-backed old-for-new scheme, according to the Society of Motor Manufacturers and Traders.

New car sales rose by six per cent compared with the same month in 2008.

"This was the second successive month of growth and builds on the 2.4 per cent gain in July, as the scrappage incentive schemes continue to influence the market positively," the SMMT said in a statement. The gain in July had been for the first year-on-year growth in 15 months. On a 12-month basis, sales of new cars in Britain had plunged 15.7 per cent in June and by 24.8 per cent in May.

Despite state-aid, the global automaking sector remains in crisis as many consumers steer clear of buying vehicles following the worst economic downturn since the 1930s.

In a bid to kick-start Britain's ailing auto industry, the government recently introduced a scheme whereby 10-year-old cars can be scrapped in return for a £2,000-pound (€2,291) discount on a new model.

"The scrappage incentive scheme is having a positive impact but with consumer and business confidence still fragile, there remain significant risks ahead. It is essential that these early signs of recovery are sustained into 2010," SMMT chief executive Paul Everitt said.

The SMMT added that August's sales growth resulted in the sale of 67,006 vehicles.

In a further boost to Britain's auto industry this week, the government on Wednesday said German carmaker BMW planned to build new models of the iconic Mini in the country. Britain's scrappage scheme came into effect on May 18 and is scheduled to last until February 2010 or until the £300 million of government funding expires.

Britain's government is contributing £1,000 per car to its scrappage scheme while the industry provides a similar amount. The British project is similar to ones introduced in France, Germany and the United States.