CAR  sales slumped again in July, with registrations down 4.1% to 157,198 vehicles, the fifth consecutive month of decline.

Declines were seen across almost all sectors as political and economic uncertainty and confusion over future government policy on different fuel types continued to knock consumer and business confidence.

The latest SMMT figures reveal the biggest drop was diesel sales, down 22,1% while plug-in hybrid electric vehicles continued their recent decline, down 49.6%.

However demand for battery electric vehicles shot up by a 158.1%, resulting in a 1.4% market share, the highest monthly market share on record.

The SMMT forecasts ongoing investment into new, ever more advanced powertrain technology will result in battery electric vehicles doubling their market share next year, with 51,000 registrations in 2020.

This will still represent only 2.2% of the overall market. For the UK is to meet its zero emission ambitions, the SMMT called for world-class, long-term incentives, supportive policies and substantial investment in infrastructure.

Chief Executive Mike Hawes said, “Despite yet another month of decline in the new car market, it’s encouraging to see substantial growth in zero emission vehicles.

“Thanks to manufacturers’ investment in these new technologies over many years, these cars are coming to market in greater numbers than ever before.

“If the UK is to meet its environmental ambitions, however, government must create the right conditions to drive uptake, including long-term incentives and investment in infrastructure.”

Michael Woodward, UK automotive lead, Deloitte, said that its latest survey of chief financil officers revealed businesses are pausing investment, and the decline in business sales is part of this wider trend.

He added: “For consumers, however, the growth of battery electric vehicles continues. Recent announcements on company car tax included a clear incentive to support the adoption of zero emission cars from 2020.”

Alongside government incentives, the total cost of owning and running an electric vehicle continues to fall. Deloitte analysis predicts a tipping point will be achieved in the UK by 2021, when electric vehicles are expected to become cheaper than their diesel and petrol counterparts.

Ian Gilmartin, Industry Director at Barclays Corporate Banking, said that the industry is doing everything it can to try to stimulate demand.

He added: “There are still good financing deals available and quality new models on offer. However, it’s all about the external environment at the moment, with no-deal Brexit fears growing and renewed currency weakness putting more pressure on supply chains and margins.

“Summer is always a bit quieter, so traders will be focused on their plans for the plate change in September, and hoping that the new administration in Westminster will take steps to give the industry the support it needs to get more cars rolling out of the showrooms before the end of the year.”

Jon Lawes, Managing Director, Hitachi Capital Vehicle Solutions said thatincrease in battery electric registrations and its highest market share to date is encouraging for the future state of the market, but significant obstacles remain.

He added: “A 49.6% decline in plug-in hybrid models shows that the decision to exclude many of these vehicles from qualifying for subsidies is continuing to take its toll, and the lack of electric plug-in infrastructure is still hindering the transition to AFVs more widely.

“With a 62% majority in our recent research supporting the move to electric models, the appetite is there but the Government must work harder to incentivise greener vehicle purchases.”