New car registrations fell by 22.2% in October to 131,495 units but were on a par with the same month last year excluding the scrappage scheme.

The 2010 October market was 2.4% ahead of the low of 2008, and on par with the 2009 market if all scrappage volumes were excluded. In October 2009 scrappage represented 21.9% of the market, with 37,000 units.

Despite the fall in October, the market remains up 4.8% over the first 10 months of the year at 1,767,154 units.

Paul Everitt, SMMT chief executive, said: “There was a significant fall in October’s new car registrations, reflecting the impact of the scrappage incentive scheme (SIS) at this time last year and some deterioration in consumer confidence.

“Total new car registrations in 2010 are forecast to be 2.026 million units, 1.5% up on 2009. “The industry expects the coming months to be challenging with slow, but steady, economic growth feeding through to improved confidence and demand during 2011.”

Diesel car registrations rose by 3.8% as market share climbed to a record 54.7%, 13.7 percentage points higher than a year ago when demand for small petrol cars was vibrant through the scrappage scheme.

Registrations of alternatively fuelled cars jumped 13.7% in the month and are up 51.3% over the first 10 months of the year.

The three and six month performances show how the market has cooled recently, with declines of 13.6% and 6.1% respectively, but over the past 12 months growth remains up 9.6%.

The Ford Fiesta was again the best selling model, but registrations of supermini and mini segment cars have fallen sharply in recent months.

Sue Robinson, Retail Motor Industry franchised director, said: "The continued media coverage of Government spending cuts, and their effect on the public purse, raised consumer concerns, with buyers waiting to ascertain the full effects of the cuts on their personal budgets before committing to large ticket purchases.

“Despite reports of a slight recovery in the economy the threat of increased university fees, removal of child benefits and the rise in petrol prices have all contributed to a more cautious consumer, who favours a car with high miles per gallon, and affordable servicing. Notably, diesel car sales reached their best ever monthly market share.”

The VAT rise in January was expected to lift the market towards the end of this year but the potential 2.5% saving appears to have been counteracted by the coalition’s tough budget action.

Robinson said: "Porsche, Bentley and BMW all reported increased sales compared to 2009, the cost of 2.5% VAT increase will have a significant effect on the price of such vehicles, and, with interest rates low those who can afford to are well advised to spend rather than save."