2010 car sales rose by 1.8 per cent

Market improves but industry warns that sales could fall by as much as five per cent this year.

Sales of new cars in the UK grew by 1.8 per cent in 2010, according to new industry figures. The Society of Motor Manufacturers and Traders said 35,847 more new cars were sold last year compared to 2009 .

But the SMMT warned that car sales could fall by as much as 5 per cent this year. This was reflected in sales which were up by 19.9 per cent in the first half of the year, but which fell 13.8 per cent in the second six months, largely due to the end of the government's Scrappage Incentive Scheme in May 2010. Over 100,000 cars were registered through the scheme in 2010, around 5 per cent of the total market. Registrations plunged by 18 per cent in December - a fall to 123,000 vehicles.

The SMMT's chief executive Paul Everitt said 2010 had been a "year of recovery for the motor industry".

"Economic conditions remain extremely challenging, but industry expects demand to strengthen in the second half of the year," he added.

"Competition in the retail sector will intensify as the industry seeks to rebalance demand across its new and used car and service and repair business."

He added that UK motor manufacturing had recovered "particularly well" in 2010, saying the outlook was for "further steady growth" this year.