However, volumes for the year-to-date still surpassed the one million unit mark for the fifth successive year.
The new car market has fallen in each month of 2005, but the 3.4% cent fall reported in May was the smallest recorded so far.
The loss of MG Rover and the effect of recent interest rate rises remains key to this month's figures.
The slowdown in the market is generally in line with expectations. Recent high street sales figures show that consumer confidence is low and a subdued manufacturing sector is also unsettling demand. While net volumes are forecast to slide, a market of almost 2.5 million units is still envisaged in 2005.
Registrations of both UK and imported cars also fell in May. UK-built cars saw a sharper decline – with a market share of 16.9% in the month and 17.7% over the year-to-date.
The lower medium segment recorded a 17.2% rise in May, following improved volumes by most in the sector, particularly Vauxhall, BMW and Audi. Three of the top four sellers in both the month and year-to-date are lower medium segment cars. The segment surpassed supermini volumes in both the month and year-to-date.
In May both luxury saloon and dual purpose segment cars recorded an increase in volumes, with rises of 4.2 and 2% respectively.
The top selling car in May was the Ford Focus, followed by the Vauxhall Astra, then Corsa.
Diesels accounted for 36.8% of the May new car market – their highest rate this year and the third highest level ever. This is the 56th successive monthly rise and the 12.1% growth in May was the best rise this year. Diesel volumes have risen by 5.8% over the year-to-date, pushing their market share from 30.9 to 34.8%.
The Ford Mondeo beat the VW Golf to be the best diesel selling model in May, but the Golf remained top over the year-to-date.
Society of Motor Manufacturers and Traders chief executive, Christopher Macgowan, said: “In a competitive market, this month's figures remain stable, despite a slight dip compared to last year's near record levels. The industry is proving resilient as it rides out weakening consumer confidence and the short-term problems associated with MG Rover.
“The new road pricing proposals could also have an effect on car buyers. Charging may well have a role in managing demand on our congested road network but it must not lead to an increase in tax take from the motorist. Any plans to change driving habits will only succeed if government delivers an improved infrastructure and a credible, cost efficient public transport network.”
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