Last year saw two million news cars sold, the biggest figure since 2008, according to official figures.
The 5.3% rise was the biggest increase since 2001, with new vehicle sales boosted by strong demand from consumers.
The Society of Motor Manufacturers and Traders (SMMT) said new car sales hit 2,044,609 over the year, with December seeing a rise of 3.7% compared with the same period the previous year.
SMMT chief executive Paul Everitt said the market for new cars grew at its fastest rate for more than 10 years, thanks to more high-tech, fuel-efficient models being available..
He added: "Looking ahead to 2013, we anticipate the market will hold firm, with manufacturers and dealers working hard to deliver quality and value to motorists."
The best selling car of 2012 was the Ford Fiesta, with sales of 109,000. The Vauxhall Corsa was second on the list, with 89,434, followed by the Ford Focus (83,115) and the Vauxhall Astra (63,023).
A 12.9% rise in demand for new cars fuelled last year's healthy sales, and new car owners can look forward to better deals forbreakdown cover .
Copyright Press Association 2013