Sales of new cars in July climbed to 172,907, a rise of 6.6% on the same month in 2013, and kept up a run a of growth stretching back more than two years.

Mike Hawes, chief executive of the Society of Motor Manufacturers and Traders (SMMT), said: “July saw the new car market extend its record period of growth to a 29th month, as confident consumers took advantage of an array of new products and attractive finance deals on the latest fuel-efficient new cars.

“The continued positivity has led to an uplift in the SMMT full-year forecast to 2.45 million passenger car registrations, a rise of 8.1%. However, the more moderate growth of the last three months shows that overall demand is beginning to stabilise.”

Sue Robinson, director of the National Franchised Dealers Association (NFDA) which represents franchised car and commercial vehicle retailers, commented: “It is extremely encouraging that new car sales continued to improve in July with year-to-date growth now at 10.1%.”

She added: “With such strong manufacturer and finance offers currently available, dealers are reporting that it is proving much easier to close a sale. However competitive pricing and strong incentives remain important if the sales trend is to continue throughout 2014.”