Sales of new cars in the UK fell 4.6 per cent in July to a total 156,588 - the third successive monthly decline.

The July figures brought new car sales so far this year to 1,373,033 - a narrow rise of 1.1 per cent on the same period last year, figures compiled by the Society of Motor Manufacturers and Traders revealed.

Rising interest rates and the anticipation of future price cuts in the coming months, coupled with the knowledge that the new "x" registration is on the horizon are believed to have contributed to the cooling of the market.

In response to the results, the SMMT has adjusted its full year forecast from 2.6 million units in April to 2.58 million units.

Despite the disappointing performance, Christopher Macgowan, SMMT chief executive, remained upbeat about the prospects for the industry: "Record registrations in July 2003 set a challenging target for this month but we expect consumers to remain confident and deliver another strong year for new car registrations."