The unexpectedly large 9.3 per cent drop in new car registrations in September should send a warning sign to policymakers in government and at the Bank of England.

September is traditionally the second busiest month in the UK car market, given the licence plate change, so a 9+ per cent drop is pretty significant and reflects a broader weakening of the economy.

September was the sixth consecutive month of declining new car registrations, illustrating how car makers are facing a tough market after years of buoyant growth. Indeed, it seems 2017 will see the first fall in new car registrations since 2011.

That should not come as a surprise. I have been saying for some time here in Birmingham Post columns that the new car market was "overcooked" and faced a decline this year of the order of five to ten per cent (more than what the SMMT has been forecasting) as the credit-fuelled sales boom reaches the end of the road.

Brexit-induced uncertainty and faltering growth have exacerbated that prospect.

Of course, you can debate quite how indicative car registrations are as a measure of the state of the broader economy but it's worth noting they are crawled over at the Bank of England's interest-rate setting Monetary Policy Committee - and for good reason.

The car market was anyway "overtrading", driven by financial innovations such as Personal Contract Plans (PCPs).

Signs of stress appeared in the market late last year, with so-called pre-registered sales rising - as far as I can tell, to ten to 15 per cent of all car registrations by the last quarter of the year.

These arise where dealers do not actually sell cars to real customers but register the cars themselves so as to hit sales targets and qualify for bonuses from manufacturers.

Pre-registrations have always been around but the levels observed indicate the market was under strain.

The Bank of England is also concerned about the financial stability of PCPs as banks have a £20 billion exposure and manufactures as much again.

The Bank is concerned that the industry's growing reliance on PCPs has made it more vulnerable to macroeconomic downturns.

The Bank of England could well impose tougher affordability criteria, to improve the quality of the loan book.

This could, in theory, lead to a credit crunch but what is more likely is a vigilant Bank imposes controls that gradually slow the market without causing a snowball effect.

That still has the effect of restricting car sales, however.

The downturn in car sales has been accelerated by other factors including a rapid switch away from diesels in the wake of the 'dieselgate' scandal, with consumers spooked by bad news about diesels and concerns over future residuals.

The deflating of the PCP bubble and diesel's decline can be seen as sector specific issues so what does the car market downturn tell us about the wider state of the economy?

A few observations. The Brexit vote-induced depreciation in sterling last year has fed through into higher import prices as car firms edged up prices (not withstanding their recent so-called scrappage schemes) which has acted to cool the quantity demanded.

More broadly, the economy is slowing, given the Brexit-induced uncertainty and the fact big ticket items like cars are traditionally cyclical items.

Car sales track confidence quite closely. Fleet sales were down by ten per cent, for example, indicative of business investment taking a hit.

As Mike Hawes, chief executive at the SMMT, said: "Business and political uncertainty is reducing buyer confidence, with consumers and businesses more likely to delay big ticket purchases."

Given the economic slowdown, why the pressure from the Bank of England now to increase interest rates?

If the Bank wants to get interest rates back to 0.5 per cent (where they had been stuck for years post financial crisis until the Brexit referendum) then it probably should have done that a year ago when the economy was still growing strongly on the back of consumers pulling forward consumption decisions on items like cars in expectation of future depreciation-induced price rises.

The economy is now slowing and rising rates do not make that much sense despite Mark Carney's recent hints.

Of course, the economy and sterling might get a boost if and when a Brexit transition deal is agreed. But there's no sign of that happening anytime soon.

In the meantime, the UK's car market has to cope with a bumpy ride.

Professor David Bailey works at the Aston Business School.