New car demand fell by 4.4% in 2011 to 1.94 million units but was ahead of the forecast 1.92m thanks to support from the fleet market.
Registrations in December fell by 3.7% to 119,188 units and the market was down 1.8% in Q4, according to the latest figures from the Society of Motor Manufacturers and Traders (SMMT).
Paul Everitt, SMMT chief executive, said: “2011 proved to be a challenging year for the UK motor industry.
“Weak economic growth will make trading conditions tough in 2012, but record numbers of new and updated models, significantly improved fuel efficiency and exciting new technologies will help to encourage consumers into showrooms.
“Business and consumer confidence will be the key to a successful year, so it will be important that Government delivers on its growth strategy and helps to resolve instability in the Euro Zone.”
Diesel outsold petrol for the first time in 2011 with 981,594 diesel units sold in comparison to 934,203 petrol units.
The SMMT is expecting the new car market to be “broadly stable” in 2012, with firmer recovery expected in 2013.
The full year market was some 18,000 units or 0.9% ahead of SMMT’s forecast for 2011, as set in September.
At that time the new car market in 2012 was expected to hold at 1.964 million units and grow to 2.047 million units in 2013. Since those forecasts were made independent forecasts for the UK economy have been downgraded, with concerns in particular over the Euro Zone crisis and consumer confidence.
The Ford Fiesta was the best-selling new car in 2011, with the Volkswagen Golf the best-selling diesel model.
The supermini segment remains the largest in the UK, with a market share almost unchanged on 2010 at 36.3%.
Despite stretched budgets in last year, the executive, luxury saloon and dual purpose segments all recorded growth in registrations in 2011.
Sue Robinson, director of the RMI National Franchised Dealers Association (NFDA), said: “The decline in the retail market highlights an unchanging lack of consumer confidence.
“While the economy remains fragile and the Euro crisis continues to affect stability, consumer confidence remains very low.
Many consumers are finding their finances constrained due to inflationary pressure on household bills and travel costs. Those who do have money to spare are putting off larger purchases until there are signs that the economy is starting on a road to recovery.
“We would urge the Government to take measures now to secure the UK economy and to bring back consumer confidence. The NFDA will be meeting with Danny Alexander, chief secretary to the Treasury, this month to request that action is swiftly taken to bring in measures to support growth, and bring back confidence to consumers and business alike. If the Government do take action we believe that the economy will respond in a positive way.”
The NFDA’s forecast for 2012, in conjunction with Deloitte, suggests the new car market will drop to 1.84 million units.
Alistair Scullion, Managing Director of Experian Automotive commented :“The fall in demand for new cars should translate in key adjustments from the UK motor industry's players.
"The demand is shifting from new cars to used cars and although this makes trading conditions tougher, the UK automotive market has already proved more resilient than its European counterparts."