NEW car sales in the UK fell 5.7 per cent last year amid falling business and consumer confidence, industry figures show.

Some 2.54 million new cars were registered in 2017 compared with 2.69 million the previous year, the Society of Motor Manufacturers and Traders (SMMT) said.

This marks the first fall in sales for six years.

December saw an even sharper decline of 14 per cent, while demand for diesel models fell by 31 per cent last month and 17 per cent over the year.

SMMT chief executive Mike Hawes predicted the market’s decline will continue in 2018, with registrations down 5-7 per cent.

He described 2017 as a “very, very volatile year” with the fall in new car sales caused by “a drop in both business and consumer confidence”.

Hawes also revealed that uncertainty over transitional arrangements following the UK’s withdrawal from the European Union in March 2019 has caused some manufacturers to delay investment decisions.

If there is no clarity by the end of March they will have to start implementing “contingency plans” which could harm funding for UK operations, he added.

Asked about the decline in diesels, Hawes claimed “confusing anti-diesel messages have caused many to hesitate before buying a new low-emission diesel car”.

Rather than choosing alternatives, many people are “just sitting on their hands”, he said.

In November’s Budget, Chancellor Philip Hammond announced a tax hike on new diesel cars from April 1.

This came after the UK Government unveiled plans to ban the sale of all conventional diesel and petrol cars by 2040, with the Scottish Government setting a more ambitious target of 2032.

The SMMT said the amount of CO2 emitted by the average new car bought in 2017 is expected to have risen year-on-year for the first time in 20 years, reaching 121 grams per kilometre.

This is because the market share of diesel cars, which produce less CO2 than petrol cars as they are more fuel efficient, dropped from 48 per cent in 2016 to around 42 per cent.

The increase makes it harder for manufacturers to meet an EU target of 95 grams per kilometre by 2021.

Petrol registrations dropped 2.1 per cent in December but rose 2.7 per cent in 2017 as a whole.

Alternatively-fuelled vehicles reached a record market share of 4.7 per cent last year.

Hawes stressed that 2017 was still around the third best year for new car registrations in the past decade and followed record performances in 2015 and 2016.

Environmental groups welcomed the decline in new diesel car sales.

Greenpeace UK’s clean air campaigner Paul Morozzo claimed consumers are “sending a clear message to the car industry” that it must move on from “polluting diesel”.

He said: “Diesel cars have been fuelling a major air pollution crisis that has made our cities’ air toxic and harmful to breathe.

“Electric vehicles and hybrids are better for both air quality and the climate and if the UK car industry fails to invest in the technologies that consumers want then they will be left behind in the race for this trillion-dollar industry.”

However, AA president Edmund King claimed that the “demonisation of diesel” had resulted in an “emissions own goal” as some motorists switched to petrol cars.