Data released on Monday by the Society of Motor Manufacturers and Traders showed new car registrations fell 2.9 per cent month on month to 153,599 in October, driven by a 21 per cent drop in diesel registrations to 62,366.

Although hybrid and plug-in registrations were up 30.7 per cent, the SMME said data indicated the outlook for these more environmentally friendly vehicles “lags behind government ambitions.”

October’s figure follows a fall of 9.3 per cent in September, which is a traditionally strong month for car sales. In the calendar year to date, new car registrations have fallen 7.2 per cent, with new diesel cars down 30.7 per cent.

“Vehicle excise duty upheaval, regulatory changes and confusion over diesel have all made their mark on the market this year so it’s good to see plug-in registrations buck the trend. Demand is still far from the levels needed to offset losses elsewhere, however, and is making government’s decision to remove purchase incentives even more baffling,” said SMMT chief executive Mike Hawes.

Demand for diesel cars has slipped since the 2015 Volkswagen emissions scandal, and in Julyenvironment secretary Michael Gove said the UK government planned to ban the sale of new petrol and diesel cars in Britain by 2040.

“We need policies that encourage rather than confuse. Government’s forthcoming review of WLTP’s impact on taxation must ensure that buyers of the latest, cleanest cars are not unfairly penalised else we will see older, more polluting cars remain on the road for longer,” said Mr Hawes.

Uncertainty over Brexit has also pushed down consumer confidence in the UK, while car manufacturers have repeatedly warned of the damage to the industry that a no-deal outcome could cause and of a slowdown in investment that has already begun to take hold.

“A lack of stock, confusion around WLTP, and economic uncertainty around Brexit continue to keep dealers awake at night. We are seeing a number of manufacturers reducing their targets for the end of the year, recognising the challenges in selling cars at the moment,” said Seán Kemple, director of sales at Close Brothers Motor Finance.

While a rise in real wages, as inflation eases, should help support car sales going forward, “until households can be sure that a no-deal Brexit won’t happen early next year, car sales likely will remain at their current depressed level,” said Samuel Tombs, chief UK economist at Pantheon Macroeconomics.