New car registrations were up 10.8 per cent in June, despite fears that the end of the car scrappage scheme introduced by the previous Labour government would cause a slump.
In the first half of 2010 new car registrations rose by 19.9 per cent, the Society of Motor Manufacturers and Traders said.
Despite the rise the SMMT said it expected the volume of sales to slip in the second half of the year now that the scrappage scheme is over.
In June registrations for Alternatively Fuelled Vehicles (AFVs) reached their highest ever market share of 1.2 per cent in June. Overall AFV volumes increased by 157.4 per cent in June and rose by 150 per cent in the last six months.
For the first time since February 2008 the Vauxhall Astra was the best selling car model last month. In the first half of 2010 Ford Fiesta's were the best selling models.
Paul Everitt, Chief Executive of the SMMT, said, "The new car market continued to perform above expectations in June, with fleet sector registrations up 25% compared to this time last year. The results indicate improved business confidence and a strengthening economic recovery."
"The industry still expects challenging economic conditions in the second half of the year and government action to improve access to credit for consumers and businesses will be important in sustaining the momentum of recovery."