Total new car registrations in 2001 were more than 10 per cent higher than in 2000, reaching a total of 2,458,769 units, beating the previous record set in 1989 by 157,825 units or 6.9 per cent.
December was also the seventh best-ever month for new car registrations in 2001, with the total rising by 17.3 per cent to 126,471 units. March, June, July, September, October and November 2001 were also 'best-ever' months.
Private buyers led the demand for new cars in 2001 with sales in this sector up 22 per cent year-on-year. Fleet registrations rose by 1.4 per cent.
SMMT chief executive Christopher Macgowan said: "In each month of 2001, the new car market grew with the previous year-end record, set in 1989, falling by the end of November. December's figures, which saw growth of 17 per cent, are really the icing on the cake.
"This was a year in which the sun shone on new car buyers with a more competitive market than ever before and a raft of enticing new models to tempt the buying public. Many commentators have waited for the market to cool, but I'm delighted that this hasn't happened."
The SMMT says it does still envisage a reduction in registrations this year, to around 2.3 million units.
The Retail Motor Industry Federation said record registrations were a direct result of the campaign by motorists and car dealers in 1999 to bring prices of new cars down in line with those in Europe.
"The campaign that started in 1999 and continued through much of 2000, against a background of increasing imports of cheaper cars from Europe, has shown tangible results in 2001,' said Alan Pulham, RMI franchised dealer director.
"Manufacturers agreed price reductions in the last quarter of 2000 that have given private buyers the incentive to return to UK dealer showrooms throughout 2001."