January UK registrations fell 8.2% to 181,474 units, according to figures released by the Society of Motor Manufacturers and Traders.

But diesel registrations rose to 66,455 units – up 7.7%.

SMMT chief executive Christopher Macgowan, says: “The new car market is a key economic indicator and January's figures reflect consumer confidence. While this month's figures are below the strong start made in 2004, new car registrations continue to demonstrate a healthy level of demand.”

The UK has also been confirmed as the second biggest European market with 2,567,269 units sold in 2004.