The new car market is expected to remain strong despite a recent fall in demand, according to new research published today.

The Society of Motor Manufacturers and Traders (SMMT) reported that sales of new cars declined by 8.5 per cent in May following changes to vehicle tax rates in April.

It said 186,265 new cars were registered last month, with business purchases driving the market, up 20.1 per cent, to offset declines from private and fleet buyers.

SMMT chief executive Mike Hawes said: "We expected demand in the new car market to remain negative in May due to the pull-forward to March, which was an all-time record month, resulting from Vehicle Excise Duty reform.

"Added to this, the general election was always likely to give many pause for thought and affect purchasing patterns in the short term.

"Although demand has fallen, it's important to remember that the market remains at a very high level and, with a raft of new models packed with the latest low emission and connected technology coming to market this summer, we expect the market to remain strong over the year."

Although it dipped slightly in the previous month, the market for alternatively fuelled vehicles (AFVs) bounced back in May to continue the upward trend seen in the first quarter and take a new record market share of 4.4 per cent.

More than 8,000 AFVs were registered in the month, representing an increase of 46.7 per cent.

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Readers' comments:

Mike Lawrence: The billions of pounds used for PCP (Personal Contract Purchases) could make 2007 and the banks then looks very mild in comparison.

If the value at the end starts to fall, as it will if the bottom drops out of the used car market, then there are going to numbers of bankers heading for the top floor all over the world.

I was always a bit easy going over PCP until they started bundling them up to make a 'financial product', as they did with suspect mortgages 10 to 15 years ago, and selling them. Then concern set in which has not been alleviated by anything so far.