Pandemic-related global parts shortages blamed for the drop.
"Erratic supply" expected in 2023, with annual new car sales forecasted at 1.8m.
Sales of new cars in the UK 2022 fell by two per cent to 1.61 million, according to the latest data from the Society of Motor Manufacturers and Traders (SMMT).
This was despite the new car market recording its fifth consecutive month of growth in December, with an 18.3 per cent increase to reach 128,462 new registrations.
The SMMT said that the second half-year performance was not enough to offset the decline recorded during the first half of 2022, caused by the pandemic-related global parts shortages, notably a lack of semiconductors.
It said that supply chains are beginning to stabilise and although the shortage of semiconductors is expected to ease, "erratic supply" will likely impact manufacturing throughout 2023. The SMMT’s latest forecast is for new car sales to be up on this year, to around 1.8m new cars in 2023. This would still be around a quarter down on pre-Covid levels.