New-car sales in the UK rose 8.4 percent in December, propelling Europe's second-biggest car market after Germany to a full-year record. However, industry watchers warned that registrations are likely to be flat in 2016.
Registrations last month increased to 180,077, the Society of Motor Manufacturers and Traders (SMMT) said in a statement today.
Buoyed by rising consumer confidence, the strength of the pound against the euro and cheap car loans, 2015 sales rose 6.3 percent to 2.63 million, the best-ever annual result, the SMMT said.
Mike Hawes, SMMT CEO, said 2016 was unlikely to record further growth. "The past four years have seen a remarkable period of sustained growth, and the outlook remains positive with every reason to expect the market to hold broadly steady in 2016," he said in the statement.
About 75 percent of new-car purchases are now made on credit with many customers effectively renting a new car -- typically for three years -- before trading it in for a new model using a scheme known as a personal contract plan (PCP).
The UK's car market has likely now peaked, John Leech, UK head of automotive at analysts KPMG, said in an emailed statement.
"With UK consumer confidence for major purchases finally back to pre-financial crisis levels, UK new car sales have surely reached their plateau. Sterling was 12 percent higher compared to the Euro on average in 2015 which enabled vehicle manufacturers to offer higher incentives to consumers and dealers alike throughout 2015."
"My forecast is that new car sales will slip back 1 per cent in 2016, with the first half of the year stronger than the second half," he said.
Most economists polled by Reuters expect the Bank of England to raise interest rates for the first time since before the financial crisis in the second quarter of this year, making it marginally more expensive to meet repayments on car purchases.
The previous record for registrations in the UK was set in 2003 when 2.58 million new cars were sold.
Ford on top, VW down
In December, Ford was the best-selling brand with sales for the month up 13 percent, followed by Vauxhall, whose volume slipped 10 percent. BMW brand was No. 3 with sales growing 38 percent.
Sales at No. 4 Volkswagen brand, which fell 10 percent in October and 20 percent November in the aftermath of the diesel emissions cheating scandal, recovered somewhat in December recording a fall of just 0.4 percent. Nissan rounded off the top five, with a sales increase of 12 percent.
• Download Excel file, above right, for UK sales by brand for December and 12 months.
Despite Volkswagen’s diesel scandal, industrywide sales of diesel cars rose 6.3 percent last month. Sales of gasoline cars were up 9.2 percent.
Ford was the UK's top-selling brand in 2015 despite its full-year volume growing at 2.6 percent, less than the industrywide growth. No. 2 brand Vauxhall’s volume increased by 0.2 percent. BMW brand sales were up 12 percent, ahead of VW brand, which rose 4.1 percent. Nissan's volume was up 11 percent.
Reuters contributed to this report