Registrations year to date also dropped by 0.6% to 1,038,289 units.
Paul Everitt, SMMT chief executive, said: "The slow-down in the overall new car market in May comes as no surprise and reflects concerns across the economy.
"The figures are in line with SMMT forecasts for 2008, and we expect a tough year ahead. Vehicle manufacturers and dealers will have to work hard to attract consumers, who are facing increasing household and motoring expenses."
Between 1999 and 2007, May has averaged 192,838 units, or an 8% share of the annual market. The 2008 performance was 7% or 13,566 units shy of this and was the weakest May volume since 1999.
May marked the first sizeable downturn in private demand with volumes down 9.5% or 7,709 units.
The business market was also weak during the month. However, fleet volumes rallied to off-set some of the declines elsewhere. Over the first five months of the year only the fleet market has grown.
Ford's Focus maintained its best seller’s slot in May. Once again the Zafira performed well inside the top 10, and upper medium segment cars occupied the final three slots in the rankings, reflecting the strong fleet sales recorded in the month.
The mini segment showed the strongest growth in May, with registrations up 120%. The newly launched Hyundai i10 was the best seller in the segment.
Set against a backdrop of rising fuel costs, CO2 based taxes and consumers looking to improve their carbon footprints, growth in the diesel market is to be expected. Diesel volumes and market share improved in May.
The Ford Focus was the best selling diesel model, but the Volkswagen Golf remains number one over the year-to-date.
Demand for alternatively fuelled vehicles (AFVs) slowed for the first time this year in May, down 8.3%.
Sue Robinson, Director of the RMI National Franchised Dealers Association (NFDA), said: "Current economic uncertainty, and increasing household costs mean that many consumers may be taking a "wait and see" attitude on all major purchases, but growth in some new car segments shows that there is still a lot of life in the new car market."
Today also saw the Bank of England announce that the interest rate will remain at 5%.
Robinson said: "It’s good to see that the Bank of England has taken a cautious view on interest rates, and held the rate for June. This will allow the most recent cut in interest rates to take effect.
"However, there is some concern that, with inflation on the rise and consumers reviewing their debt status, household spending may need some further stimulation. A further cut in interest rates would help business and consumers alike."
UK new car registrations
Registrations by sales type
Top 10 best sellers