New car fuel efficiency has improved by an average of 26.5% since 2000, according to new data from the Society of Motor Manufacturer s and Traders (SMMT).
The number of VED-free, sub 100g/km CO2, cars rocketed in 2012, more than doubling their share of the market to 8.2% in the year.
This trend towards low emissions and maximum fuel efficiency was reflected by the number of cars registered with less than 130g/km of CO2 emissions.
This emission level is the target average limit set by Europe for manufacturers to achieve by 2015 and last year more than half the market - 55.4% - met the level or improved on it.
Analysis of the emissions of all new cars registered in the UK showed a continued trend in falling CO2 and improving fuel efficiency.
Last year’s emissions improved 3.6% year-on-year to 133.1g/km CO2 (equivalent to 53.4mpg), down more than 26% since the year 2000.
Looking at the rate of progress made over the past five years, average emissions across all segments (car sizes), dropped almost 20% with larger vehicles making the biggest improvements.
Executive cars cut CO2 25% while Specialist Sports and Dual Purpose vehicles improved 24.7% and 23.1% respectively.
Matthew Croucher, author of SMMT's latest emissions report, said: "The industry can be proud of the progress it has made in reducing CO2 emissions and improving fuel efficiency by more than 25% since 2000.
“The UK motor industry recognises its responsibilities and the industrial opportunities from the transition to ultra-low carbon vehicles.
"Future environmental and economic success will be determined by sustained investment in new technology, R&D, infrastructure and consumer incentives. We are seeing improvement in conventional technologies and the emergence of a range of alternative technologies, creating one of the most innovative periods for the global automotive industry."
Achieving record market shares, diesel and alternatively-fuelled vehicles (AFVs) continued their rise in popularity, taking 50.8% and 1.4% of the 2012 market respectively.
Petrol-electric hybrids accounted for 85% of all AFV volumes in 2012 with an average CO2 output of 98.7g/km, some 26% below the UK average.
Though market development is in its earliest stages, electric and plug-in vehicle registrations rose 111.8% in 2012 to 2,237 units, aided by the introduction of new models and the Plug-In Car Grant. As of December 31, 3,021 claims have been made through the Plug-in Car Grant scheme.