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New car sales rose 1.8 per cent in 2010 to 2,030,846 units, according to SMMT data.
Sales fell 18 per cent in December to 128,817 units with sales to private buyers on the wane following the ending of the scrappage scheme in early 2010.
The SMMT is forecasting that sales in 2011 will decline by 5 per cent to 1.93 million units in the face of “difficult market conditions”.
Following the ending of the scrappage scheme, which favoured cheaper, petrol cars, diesel penetrations rose to a new high of 46.1 per cent in 2010 with fleets increasingly buying more fuel efficient diesel powered vehicles.
“2010 was a year of recovery for the motor industry with new car registrations up 1.8 per cent on 2009,” said SMMT chief executive Paul Everitt.
“Economic conditions remain extremely challenging, but industry expects demand to strengthen in the second half of the year.
“Competition in the retail sector will intensify as the industry seeks to re-balance demand across its new and used car and service and repair business.
“UK motor manufacturing recovered particularly well in 2010 and the outlook is for further steady growth this year.”
Overall the market remains 15 per cent below pre-recession levels, according to the SMMT.