New car registrations increased by 7.6% in January to 154,562 units, according to the latest figures from the Society of Motor Manufacturers and Traders (SMMT).

While the increase in January continues the consistent growth seen in the UK, the SMMT is still forecasting 2014 to see more moderate growth in comparison to last year.

Private registrations led the growth with a 17% increase to 71,417 units registered.

Mike Hawes, SMMT chief executive, said: “The new car market ended 2013 on a high, so it is encouraging to see the January market start the year strongly.

"As fuel economy is a major consideration for many motorists, ongoing investment by vehicle manufacturers in innovative, fuel-efficient technology is a key factor in the growing demand for new cars. Looking ahead, the UK automotive industry expects to see moderate, sustainable growth in 2014."

Sue Robinson, Retail Motor Industry Federation director, said: "It would appear that consumer confidence is continuing to grow as the economy becomes more robust."

Perrys chairman Ken Savage was interviewed by BBC Radio 4 about the growth in the UK being linked to payment protection insurance payouts.

He said: "There isn’t one single thing that creates the demand for new and used cars. But people are getting PPI payments - an average of £3,000 up to £10,000. Giving an additional income to provide a deposit for a car.”

Registrations of alternatively-fuelled vehicles (AFVs) outperformed the overall market in January 2014, growing 25% and taking an improved 1.8% share of volumes.

Petrol-electric hybrids accounted for almost all AFV registrations in 2008. Since then, the increased availability of pure electric, plug-in and diesel-electric powertrains has helped the overall AFV market gain more traction.

The new government/industry ‘Go Ultra Low’ campaign to promote the advantages of ultra-low emission vehicles will provide a further stimulus to the market segment.

The Plug-In Car Grant (up to £5,000) continues to provide an incentive to buyers of pure electric and plug-in models.

Download the full SMMT new car registration figures for January 2014.