New car sales increased 47 per cent year on year in the seven months to the end of July, figures from the Society of the Irish Motor Industry show.
A total of 74,111 new cars were sold in the period to July 31st, 16,711 more than the total number of vehicles sold last year.
Director general of SIMI, Alan Nolan said: "We would attribute about 8,500 of those sales to the government scrappage scheme. In 2009, even those with secure jobs may have thought it wasn’t 'appropriate' to buy a car. The scrappage scheme kick started sales and told people it was okay to buy a new car."
The Government scrappage scheme entails a €1,500 reduction of vehicle registration tax (VRT) on the purchase of a new low-emissions car when an applicable used car is traded in.
Mr Nolan estimates that the scheme has brought the Government an extra €100 million in VRT and VAT so far this year.
Previous SIMI figures indicated that 100 garages closed during 2009 with the loss of 10,000 jobs in the sector. Mr Nolan said that while the sector was showing signs of recovery, it was "a fragile recovery".
The scrappage scheme which began on January 1st is set to run for one year. Asked if it would continue, a spokesperson for the Department of Finance said: "There are no plans yet. It will be considered in the context of the annual budget."
According to SIMI figures, the Ford Focus is the best selling model so far this year and sales of diesel cars which have lower CO2 emissions and are cheaper to tax are up 8 per cent.
Meanwhile a new electric car will be unveiled in Dublin tonight. Using the car charging stations installed by the ESB earlier this year, manufacturer Nissan says the Leaf can be charged to 80 per cent in 30 minutes and will cost 80 per cent less to run than the average 1.5-litre diesel family car.
