Figures released by the Society of Motor Manufacturers and Traders today reveal December new car registrations down 14.7% to 133,810 units compared to December 2005.
This was in line with industry expectations and was the sixth highest annual total on record. The SMMT says a major contributory factor to the fall in December was due to the market distortion caused at the end of 2005, when diesel registrations were boosted by changes to company car tax rules.
Full year volumes down 3.9 per cent to 2,344,864 units year-on-year.
Diesel registrations up 0.1 per cent to hit record volume of 898,521 units. The Ford Focus topped the annual best sellers, a crown it has held now for the past eight years.
Supermini registrations climbed by 21,102 units or 2.9% over the full year, due to new model activity and strong sales of the segment's 2006 best seller - the Ford Fiesta.
Luxury saloons and MPVs also showed net growth in the year, up 13.3 and 7.4% respectively.
"2006 was by no means an easy year for the motor industry and the fall in new car registrations comes as no surprise. Uncertainty, fuelled by factors like interest rate rises, political instability and fuel price fluctuations conspired to make the market place a difficult one," said SMMT chief executive Christopher Macgowan.
"Although we can expect another tough 12 months ahead, that is not to say that it is all doom and gloom - 2007 promises a host of new models along with the potential for attractive showroom offers to tempt the buyer.
"The outlook is for a further modest softening in 2007, as the squeeze on consumer and government spending looks set to offer little additional encouragement to the new car buyer."
Sue Robinson, director of the RMI National Franchised Dealers Association, said: "'Although 2006 was not an easy market for the retail car sector, the year finished much as expected. However, 2007 looks less certain. Further interest rate rises, a high level of consumer debt and increasing tax burdens and utility bills are unlikely to benefit the retail new car market."