A total of 172,907 new cars were registered in July, a rise of 6.6% and the 29th consecutive month of growth.
The Society of Motor Manufacturers and Traders said economic confidence and attractive finance have driven the market up 10.1% year-to-date to 1,460,172 units.
Faster-than-expected first half-year growth has prompted the SMMT to make an upward revision of its 2014 market forecast to 2.45 million registrations, up 8.1% on 2013.
Mike Hawes (pictured), SMMT chief executive, said: "July saw the new car market extend its record period of growth to a 29th month, as confident consumers took advantage of an array of new products and attractive finance deals on the latest fuel-efficient new cars.
"The continued positivity has led to an uplift in the SMMT full year forecast to 2.45 million passenger car registrations, a rise of 8.1%. However, the more moderate growth of the last three months shows that overall demand is beginning to stabilise."