The motor industry experienced a sharp decline in new car sales in January, in comparison with the same month last year, according to latest figures.
The Society of Motor Manufacturers and Traders (SMMT) said the 11.5% drop to 128,811 is partly due to the ending of the Government's car scrappage scheme. Registrations fell for a seventh consecutive month.
The SMMT warned the plunge marks the beginning of a challenging year for the sector, indicating it might also lead to a decline in the number of people taking outcar insurance for new vehicles.
Chief executive Paul Everitt said: "Consumer confidence is low and it is important that Government uses the March Budget to help relieve some of the financial pressure on motorists by freezing fuel duty, while providing stability and certainty on motoring taxes.
"Despite the challenging conditions, the demand for low CO2 emitting and highly fuel-efficient cars continues to grow."
Factors such as last month's VAT rise as well as uncertainty over economic recovery have also contributed to the decline in new car sales, the group said. It predicted that total sales volumes could fall by 5% this year, to 1.93 million.
However the study showed a rise in the market share for cars with lower CO2 emissions, increasing by over 65% in January.
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