Volumes in January slipped 2.1 per cent year-on-year to 162,097 units and the SMMT is now predicting a revised sales forecast of 2.345 million sales in 2008 – down 2.5 per cent on 2007 levels.

“We expect a modest fall in registrations this year but a 2.1 per cent dip in January is in line with expectations,” said Paul Everitt, SMMT chief executive.

Private sales recorded the biggest decline of any sector as sales fell 5.1 per cent to 60,587 units – one of the main reasons behind January's dip. Business sales fell 3.1 per cent year-on-year but the fleet sector rallied to produce a 0.2 per cent increase to 91,001 units. Despite the total market fall in January, demand for diesel models showed no sign of letting up. Diesel registrations leapt a further 10 per cent, accounting for 44.9 per cent of the monthly market – a record for January and the second-highest market share on record.

Ford and Vauxhall remained the UK's bestselling brands and the Ford Focus remains the country's top seller. Audi, BMW, Mercedes-Benz and Nissan all recorded growth but the vast majority of carmakers all made a slow start to 2008. The SMMT said concerns remained over spending and the impact on consumer confidence from the global credit crunch. Forecasts predict that GDP will slow to almost 2 per cent this year from over 3 per cent in 2007.