U.K. new-car registrations rose for the third consecutive month in September as the government's car-scrapping scheme continued to bolster sales.

Registrations - a measure of sales - rose 11.4% on the year in September to 367,929 vehicles, compared with a 6% rise in August and a 2.4% rise in July, according to data from the Society for Motor Manufacturers and Traders.

September is one of the most important months for U.K. car sales because it marks one of the twice-yearly changes in car registration plates.

"Market conditions remain challenging with demand being underpinned by the extremely successful scrappage incentive scheme,” SMMT Chief Executive Paul Everitt said.

The U.K. scrappage plan, which came into effect May 18, mirrors similar plans in other Western European markets. It offers car owners GBP2,000 in discount on new vehicles when they trade in vehicles that are more than 10 years old. The cost of the discount is split equally between the government and car manufacturers.

Demand for new cars had plummeted in the U.K. before the scheme was implemented, due to the deepening recession. New-car registrations for the first nine months of this year are still down 15% on the year-earlier period at 1.52 million vehicles.

The U.K. government initially set a budget of GBP300 million for the scheme, meaning that up to 300,000 vehicles could be purchased. However, the success of the scheme meant that the money was set to run out this month, and the government last week added another GBP100 million to the scheme. At that time, it said some 227,000 vehicles had been ordered so far under the initiative.

“The extension of the scheme will help to sustain demand through the latter part of this year and into 2010. This will allow economic recovery to strengthen and safeguard valuable industrial capability,” Everitt said.

-By Steve McGrath, Dow Jones Newswires; 44-20-7842-9284; steve.mcgrath@dowjones.com