New car sales are predicted to grow 2.7% in 2013 with new car registrations reaching 2.1 million.
This increase will be driven by continued growth in he private sector as well as recovery in fleet registrations which started to pick up in the last few months of 2012, according to Trader Media Group.
However, for growth over the next few years to be consistent the economy needs to recover and GDP needs to settle above the 2% mark before new car registrations could return to pre-recession levels of more than 2.4 million units.
The unknown this year is the uncertainty over the performance of sterling against the Euro and the impact this has on overall attractiveness of the UK market to vehicle manufacturers and how competitive they can be with prices in the UK relative to Europe.
Tim Peake, group strategy director, Trader Media Group, said: "Last year the UK new car market hit our expectations of growth, driven by consumers looking for more fuel efficient, newer cars with 67% of our consumers saying that motoring costs were their number one priority.
"So perversely the reduction in economic output is leading to a segment of consumers looking to reduce overall costs, resulting in private registrations being up by 13% year-on-year.
"We believe therefore that new car registrations were not driven by pre-registrations but by true consumer demand and that this demand will continue to flow through into 2013, albeit at a slightly slower pace of growth given consumers’ ongoing need to reduce monthly costs.
"The other important focus should be on the new and used car total market value. Volume and price improvement seen in 2012 will continue into 2013, therefore leading to the value of the market getting back to pre-recession levels."
The recovery in new car sales is also critical for the used car market, which is suffering from reduced supply of good quality, younger stock following a depressed new car market since 2008.
In 2012 the availability of 1-3 year old stock hit a long-time low, according to Peake, making sourcing very challenging to dealers and constraining the growth of used car sales. This is expected to ease in 2013.