UK car production plant
UK new car sales have risen consistently for the past three years Reuters

Increasing demand from private consumers saw UK car sales hit a 12-year high in January, the Society of Motor Manufacturers and Traders (SMMT) said on Monday (6 February).

New car registrations rose 2.9% last month to hit 174,564 units, the highest figure on record since 2005, boosted by a 5% rise in private car registrations, the first increase since March 2016.

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The industry body added the number of alternatively fuelled vehicles grew 19.9% to take a record 4.2% market share and surpassing the 4% threshold for the first time.

Across other fuel types there was a mixed picture with diesel registrations declining 4.3% but new car registrations of petrol cars grew 8.9%.

Mike Hawes, SMMT chief executive, welcomed the increase in figures but warned a decline in sales remained likely.

He said: "2017 got off to a good start in the new car market, buoyed by a great range of new models which are safer and cleaner than ever before.

"It's encouraging to see alternatively fuelled vehicles benefiting from this positive growth, reaching a record market share. After record growth in 2016, some cooling is anticipated over the coming months, but provided interest rates remain low and the economy stable, the market is in a good position to withstand its short-term challenges."

The weaker pound has forced manufacturers to raise prices, given 85% of the cars sold in the UK are imported. However, the sales have not declined by as much as analysts had expected and the industry recorded a fifth consecutive year of growth in 2016, as a record 2.69 million new cars were sold.

The figure represented a 2.2% year-on-year increase in sales. However, this was the slowest rate of growth since the rebound began in 2011 and Hawes said it was unlikely the sector would sustain this.

"We're talking about a market that is at peak demand, following the sector's resurgence after the recession," he said last month.

"Growth at the rate we have seen can't continue forever. This is historically an incredibly high level. We're not talking about a collapse."