Sales of new cars in the UK fell by 5% in December as private buyers avoided showrooms, according to latest figures from the industry body.

The Society of Motor Manufacturers and Traders described the trading situation for dealers as "tough" and blamed interest rates and uncertainty in the wider economy.

However, the fall in private car sales was offset by increased activity in the business sector as fleet buyers took advantage of a tax break on purchases.

SMMT Chief Executive Christopher Macgowan said: "Despite a tough 12 months, a record December has seen us through to a respectable year-end total.

"December diesel registrations boosted the total as company car drivers took advantage of the three per cent tax waiver before the end of the year. However, the economic slow-down in 2005 hit showrooms, and we expect 2006 to be another tough year for the industry. Dealers will continue to fight hard for every sale."

The SMMT report showed that the overall slow-down in the new car market in 2005 lay in the private sector. A weaker economy and growing concerns over cost pressures saw the private market fall 123,553 units, down 10.3%.

However, this downturn was offset by the fleet sector which saw substantial increases in market volume in December.

The SMMT said that while trading in 2005 had beaten expectations due to the rise in diesel vehicle sales in December, the outlook for the market remained tough.

In terms of vehicle production, the loss of MG Rover in 2005 represented around 37% of the total market downturn in 2005 and almost 99% of the drop in the volume of UK-built cars in the year.

The closure of MG Rover contributed to a record proportion of cars imported into the UK in 2005.

(SP/KMcA)