New car registrations rose by 2.4% in July to 157,149, the first month of growth since April 2008.
The latest figures from the Society of Motor Manufacturers and Traders put the rise down to the positive impact of the scrappage scheme, but July is not known as being a high volume month.
By comparison, July figures were down by 13% to 153,420 units in 2008 and up by 4.9% to 176,277 units in 2007.
Registrations from private buyers and of small cars were up in July 2009 but the market is still down almost 550,000 units over the past 12 months.
The scrappage scheme accounted for 21% of July's registration total with 33,026 units registered. According to the SMMT, 84,361 vehicles have been registered under the scrappage scheme since May 18.
Paul Everitt, SMMT chief executive, said: “The impact of the scrappage scheme is clear and we are encouraged by the positive impact it has had, increasing new car registrations for the first time since April 2008.
“Industry still faces a long road to recovery and we urge the Government to take action to sustain economic recovery through easing access to finance and credit and delivering the loan guarantees set out by the automotive assistance programme.”
Sue Robinson, director of the Retail Motor Industry Federation (RMIF), said: "The impact of the vehicle scrappage scheme is now being felt, with thousands of cars bought by consumers via the scheme now on the road.
"Car dealers are reporting that the scheme is continuing to provide a halo effect for overall car sales, and is helping increase footfall into showrooms by general buyers as well as scrappage buyers."
Robinson adds: "With fleets not in the market for new vehicles at present, it is private buyers taking advantage of the scrappage scheme that are leading the revival. However, for sales to return to consistently positive levels in the medium to long term, business and general consumer confidence must be encouraged as much as possible."
To download the full table of SMMT figures for July please click here.
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