Chances of a cut in interest rates today were boosted by figures showing new car sales fell again in June.
Registrations last month were 227,623, down 4.8 per cent on June last year, the Society of Motor Manufacturers and Traders said.
The figures brought the total for the first half of the year to 1,296,485, a fall of 5.8 per cent compared with the Jan-June period in 2004.
The 4.1 per cent fall in the second quarter was less pronounced that the 7.2 per cent dip seen in the first three months.
And the SMMT was yesterday keen to stress that the June market was still nearly six per cent above the average for the month since 1999.
Fleet and business sales are holding up, but private sector sales have fallen by 72,295 since January and now account for 45.3 per cent of the British market, compared with 47.9 per cent a year ago.
"Higher interest rates and other pressures like increasing fuel costs appear to be having an impact on new car purchases," the SMMT said.
Analysts saw the figures as another strong sign that consumer spending is flagging following a succession of quarter-point rises in base rate.
With the steam having gone out of the housing market and with the manufacturing sector pleading for relief, the feeling is that the Bank of England could well announce a cut in base rate at midday today. SMMT chief executive Christopher Macgowan said the record level of sales seen in the first half of 2004 could not be sustained in the current climate.
"However, while interest rates begin to bite across all retail sectors, figures from the car sector remain healthy," he said.
"Dealers may be feeling the pinch but there is good news for consumers. More models are coming on the market and car prices have tumbled by ten per cent since 1998.
"Combine these factors with deals like nought per cent finance, free insurance and money back offers and you have all the ingredients of a true buyers' market."
The June sales figures also underlined the impact the disappearance of MG Rover is having on the British new car market.
Residual sales of just 256 MGs and 204 Rovers trickled into the SMMT data base, representing falls of 91.49 per cent and 94.23 per cent.
The loss of the Longbridge manufacturer accounted for about 75 per cent of the net slowdown in the market in the second quarter, but represented a more modest 53 per cent of the market's loss in June, the organisation said.
The collapse of the Britishowned volume carmaker means that vehicles built outside the country accounted for 83.4 per cent of the market in quarter two, up from 81.7 per cent this time last year.
Land Rover saw its sales rise by 1.62 per cent to 4,257 in June thanks in part to strong demand for the new Range Rover Sport. The rise helped offset a first half 6.58 per cent decline in sales to 22,310.
Jaguar saw its sales dip marginally to 3,229 in June and the company was 21.30 per cent down at 14,267 in the first six months.
Jaguar's sales reflect a decision to concentrate its marketing efforts on its higher margin models and hopes are high that the new diesel variant of its flagship XJ saloon due out in September will make inroads into the growing market for luxury cars powered by advanced technology diesel engines.
Mini continued to shine with June sales up by 20.83 per cent at 4,159.