The Government’s £300 million car scrappage scheme has failed to halt a further sharp slide in new vehicle sales, which fell by a quarter last month.

Monthly figures from the Society of Motor Manufacturers and Traders (SMMT) show that new car registrations in the UK fell 24.8 per cent in May to 134,858, the thirteenth consecutive monthly drop in volumes.

In total, registrations for the first five months of 2009 are down 27.9 per cent.

The SMMT said that it had seen an “encouraging start” to the scrappage initiative — which enables drivers of cars and small vans that are more than ten years old to get a £2,000 cash incentive when they trade in their old vehicle — but cautioned that “it will take time to translate into registrations”.

So far, 35,000 orders for new cars have been placed since the scheme was announced in the Budget in April and went live in May.

Paul Everitt, the chief executive of the SMMT, said: “While consumer confidence is improving, the UK motor industry is still facing a difficult economic climate.”

The SMMT said that, as details of the scheme were being finalised, some consumers may have been holding off purchasing a car, awaiting the best deal.

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