The car industry yesterday warned that "times are tough" after latest figures showed a fall in registrations for the 15th month out of the last 16.
A total of 175,277 cars were registered in July 2005 - 6.6 per cent fewer than in July 2004, the Society of Motor Manufacturers and Traders (SMMT) said.
New sales so far this year have totalled 1.47 million - a drop of 5.9 per cent compared with January-July 2004.
SMMT chief executive Christopher Macgowan said: "The record volumes of the last few years are well behind us. Consumers and manufacturers alike are feeling vulnerable and we don't see any respite in the short to medium term.
"We are hoping demand will stabilise over the next year and we will once again see a return in consumer spending.
"However, as the last seven months have shown, times are tough and the motor industry is feeling the pinch."
The collapse of MG Rover had less effect on the overall market in July than earlier in the year, yesterday's sales figures showed.
Last month, MG Rover's losses represented only 28.8 per cent of the total market's shortfall compared with 53.2 per cent in June 2005.
The number of Rover cars sold fell by 73 per cent to 771 and MG sales were 63 per cent down at 845.
July provided mixed fortunes for the remaining major West Midland manufacturers, Jaguar and Land Rover.
Jaguar, which is concentrating on pushing its lower volume, higher margin models, saw its sales fall by 16 per cent to 1,990 last month. Its year to date performance was 21 per cent down on 2004 at 16,257.
The company is expected to show an improvement in the autumn and winter as its new diesel powered XJ luxury saloon goes on sale.
The 2.7 litre car, which will be built alongside the S-Type and XK sports car at Castle Bromwich from September, should help Jaguar catch up rivals such as Audi and BMW in the fast growing market for diesel engined executive cars.
Signs are, however, that Jaguar, which also has a second diesel engined X-Type emerging, could be hit by a cooling down in the sector.
The diesel market posted its 58th successive monthly gain in July but the increase was a modest 1.5 per cent and trends suggest that the first fall in volumes in nearly five years is likely.
Land Rover, which is benefiting from the arrival of the new Range Rover Sport and the 2006-spec Range Rover in the showrooms, saw sales rise by 13 per cent to 3,037 in July.
The company, which earlier this week celebrated its best ever July sales performance in the US market, reduced its deficit for the year to date to five per cent.
Mini, which BMW builds at Oxford, suffered a rare decline in monthly sales - down 21 per cent at 3,385 but was seven per cent ahead on the year at 26,774.
Peugeot has cut production of its top ten selling 206 at its Ryton plant near Coventry and sales fell by 11 per cent to 10,825 in July and by 17 per cent to 86,233 for the year so far.