The new car market got 2007 off to a strong start with a 5.2 per cent rise in registrations in January.
Dealers sold a total of 165,603 vehicles last month, compared with 157,363 in the same month last year, thanks mainly to a near-20 per cent surge in supermini sales.
The Society of Motor Manufacturers and Traders described the January registration figures as a "positive" 8,240 increase in volumes.
But it pointed out that comparison with January 2006 is skewed by the fact that a year ago fleet buyers rushed to take advantage of tax breaks at the end of 2005.
In fact, in comparison with the 1996-2006 average for January, sales were 19,830 units, or 10.7 per cent light.
"Volumes over the full year are expected to ease by a further 30,000 units to 2.315 million units," the SMMT said yesterday.
"Pressure on both consumer and business buyers' willingness and ability to spend on discretionary items means that a sustained pick up in the UK new car market cannot be relied on in 2007."
Last month saw fleet sales rise by 8.8 per cent to 54.8 per cent compared with 53 per cent last January.
A 1.2 per cent gain in private sector registrations was the first improvement since March 2006 and the strongest since March 2004.
The SMMT warned however: "Any significant recovery in the overall new car market is likely to require an increase in private demand, but there are few indications this is likely to happen."
In its economic forecast, the organisation said it hoped that last month's surprise quarter point rise in the Bank of England base rate would dispel the need for firmer action later in 2007.
"However, concerns remain that another rise will be applied soon, which is likely to act as a dampener to consumer spending on concessionary items such as new cars."
Analysis of the SMMT's monthly registration figures show that the supermini market – Vauxhall Corsas, Ford Fiestas and the like – rose by 18.7 per cent to account for almost a third of the market.
The drive was led by Mini itself, which gained 87 per cent last month with sales of 2,724 compared with 1,458 in January '06.
Again, no strict comparison can be made because this time last year production at BMW's Plant Oxford, where Mini is built, was severely reduced because of the #100 million upgrade needed to accommodate the new, second generation, Mini Cooper and Cooper S models.
These are now in full flow and will soon by joined by the new Mini One entry-level models which makes its debut the Geneva Motor Show in March.
Jaguar reduced its continuing sales losses to just three per cent in January, thanks to the success of the XK sports car and the growing popularity of the diesel-powered variant of the range-topping XJ saloon, both of which it builds at Castle Bromwich in Birmingham.
Land Rover eased back from its 2006 record sales performance with a fall of just under one per cent to 3,251 units. The company, which, like Jaguar, is part of Ford's Premier Automotive Group, should pick up momentum again when the new generation Freelander starts leaving the showrooms in numbers.
Peugeot, which stopped building cars in the UK following last month's closure of its Ryton plant near Coventry, dipped by just under two per cent to 10,988.