The Government has decided to extend its car scrappage scheme for up to a month.
Business Secretary Lord Mandelson said the scheme, which was due to end this month, would continue to the end of March or until funds are over, whichever comes earlier.
The announcement comes ahead of the latest new car sales figures, to be revealed on Thursday, which are expected to follow the uptrend in the recent months.
The scrappage scheme, introduced last May to support car sales, grants £2,000 to motorists who exchange models over 10 years old with new vehicles.
The Government has allowed a funding of £400 million for the scheme and up to 400,000 vehicles can be scrapped.
Almost 330,000 new cars have been exchanged under the initiative, which leaves room for 70,000 more deals.
Lord Mandelson said: "Against the background of the economic downturn the scrappage scheme has proved a great success, driving UK car sales, protecting jobs and supporting the supply chain for car manufacture at a time when this sector needed it most."
The car sale figures for February are expected to improve slightly from the 111,000 new cars sold last month.
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