New car sales dropped 1.7% year-on-year to 150,431 in May, down for the 11th consecutive month, according to new figures released by the Society of Motor Manufacturers and Traders (SMMT).
The May decline was the smallest since new car sales began to drop in July 2010, the SMMT said.
A total of 846,513 new cars were registered in the year to May, down 7.3% on the corresponding period in 2010.
Paul Everitt, chief executive of the SMMT, said: "New car registrations for May were down just 1.7% on 2010 levels, with strong performances in the fleet and business sectors.
"Consumers remain cautious but, with significantly improved fuel economy, service plans and more affordable finance, there is great value on offer across the market."
The SMMT predicted that the market will stabilise in the third quarter of the year and the full-year market will total 1.93 million sales in 2011, down by nearly 34,000 units.
There was a 15.3% fall in demand from private car customers in May, while the year-to-date figure was down 18.9%.
Fleet sales increased 11.1% in May, supporting total market volumes.
Diesel cars accounted for 52.9% of the market in May, up from 46.9% during the corresponding period in 2010.
VW's Golf was the best-selling diesel model in May, while the Ford Fiesta was the top-selling car overall.
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