Car sales for the first seven months of the year were 17 per cent higher than in 1997 - with luxury marques such as Mercedes and BMW continuing to prosper. Garages also sold 53 MGs and 23 Porsches.

Figures released yesterday also showed that sales of passenger cars in July were up 20 per cent over the same month last year. Some 254 new BMWs were registered during the month in addition to 293 new Mercedes and 298 new Rover cars. The biggest selling marque was Toyota, of which 1,691 were sold, followed by Ford at 1,616, Opel at 1,599, and Nissan at 1,369.

The chief executive of the Society of the Irish Motor Industry, Mr Cyril McHugh, said sales of new cars to date this year "are well on the way to breaking the record set last year. This growth in demand for new vehicles is a good indicator of the state of the economy, and judging by the growth, the Irish economy is still accelerating, without any slowing".

Mr McHugh argued the sales figures were also excellent news for the Government. "Total Government revenue from vehicle sales for the year is likely to be around £700 million." He called on the Government to reduce the "hugely inflated levels" of Vehicle Registration Tax currently being charged.

Last year SIMI warned that the ending of the scrappage scheme could lead to a fall in sales. However the figures released yesterday show that 118,179 new cars were registered up to the end of July, over 16,000 more than for the same period last year. Of the cars sold this year to end July, 2,251 were Mercedes, 1,996 were BMWs, 1,363 were Volvo and 523 were Saab.

The figures also show that sales of light commercial vehicles during July were up 34 per cent on July of last year. The number sold was 2,309. For the year to the end of July, 19,645 light commercial vehicles were sold, an increase of 37 per cent on the same figure for 1997. Sales of heavy commercial vehicles during July increased by 16 per cent on July of last year. Sales for the first seven months, at 3,114, were 21 per cent up on the 1997 figure.