According to the Society of Motor Manufacturers and Traders (SMMT) the number of new cars sold in the UK during in May totalled 134,858, the 13th consecutive monthly decline.
The car scrappage scheme only came into effect on May 18 and involves a £2,000 incentive paid to motorists who scrap cars registered before 31 August 1999 to buy a new one.
Half of the scheme is being funded by the Government and the other half by car companies.
SMMT chief executive Paul Everitt says it expects the June figures to show improvement.
“While consumer confidence is improving, the UK motor industry is still facing a difficult economic climate,” he says.
“We have seen an encouraging start to the scrappage incentive scheme with 35,000 orders being placed since it was announced, although it will take time to feed into registration figures.”
Overall, sales in the first five months of the year were 27.9% lower at 289,598, compared to the corresponding 2008 period.
The UK car industry said it started to see immediate results from the scrappage scheme just two days after it launched (May 20)
Ford revealed it had already taken more than 3,000 new car orders and General Motors said it saw increased interest in its Chevrolet brand.