Almost 80 per cent of car dealers are feeling more confident about profit margins thanks to the government scrappage scheme, a dealer attitude survey has shown.

The scheme brought "welcome relief" to car dealers, who also reported being more satisfied about the relationship they have with their manufacturer, according to results from the National Franchised Dealers Association Dealer Attitude survey conducted by the Retail Motor Industry (RMI).

Some 75 per cent of dealer networks reported feeling increased satisfaction over their profit return, which is largely due to the success of the scrappage scheme.

New car sales in the UK were flagging, before the government-funded scheme was implemented, due to reduced demand from motorists.

In January, car production in the UK increased by 64.8 per cent on last year’s figures, which was due to rising demand from consumers, thanks to the effect of the scheme.

Sue Robinson, RMI director, said that despite the uncertainty still surrounding the economy, dealers who were surveyed "seemed reasonably positive about their businesses in the next six months".

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