Scrapping the successful cash-for-bangers scheme will drive people out of the car showrooms, a Kent banker has warned.

Car sales for 2009 were just 6.4 per cent down, the lowest level since 1995 but a lot better than dealers had feared. December sales were up 39 per cent.

Figures published today by the Society of Motor Manufacturers and Traders (SMMT) show that full-year registrations were 1.994.999.

The scrappage scheme - under which sellers of vehicles 10 years old and more can claim a £2,000 discount (half from the Government and half from the dealer) - accounted for more than a fifth of all new care registrations. The industry estimates it represented 20.8 per cent of all sales in December.

Roger Cowap of Barclays in Kent said: "The government's scrappage scheme has been a huge success, drawing people into showrooms and has accounted for almost 300,000 additional vehicles coming onto the market in 2009.

"Manufacturers such as Hyundai and Kia have benefited from the preference for smaller, cheaper, more fuel-efficient cars, boosting dealer networks all across the UK as well as reducing emissions on UK roads.

"But the ending of the scrappage scheme in February and the VAT increase this month will have negative consequences across the entire industry this year."

He urged dealers and manufacturers to avoid a sales slump by coming up with other incentives. By shopping around, price-conscious consumers could make savings equivalent to the £2,000 scrappage discount.

He added: "Lower car registration figures over the last three years will also mean dealerships need to focus more on developing and changing the perception of the servicing side of their business to grow this revenue stream.

Paul Everitt, SMMT chief executive, warned that 2010 would be another tough year, with new car registrations expected to fall below 2009 levels.