Preliminary data for 2022 released by the Society of Motor Manufacturers and Traders (SMMT) showed around 1.61 million new cars were registered.

The figure is 2% down on the previous 12 months and 25% down on pre-pandemic levels.

However, sales improved as the year progressed.

The market recorded its fifth consecutive month of growth in December.

The industry body said the annual decline was due to manufacturers being unable to meet demand for new cars due to global supply chain issues, such as semiconductor shortages, which have been exacerbated by COVID restrictions in China.

The squeeze has meant that factories worldwide have been unable to produce the volume of vehicles they would wish.

Carmakers have strong order books, despite the cost of living crisis putting huge pressure on household budgets, with some waiting lists extending beyond 12 months.

Data showed that demand was shifting away from traditionally-powered petrol and diesel models.

As the clock ticks down to the 2030 ban on the sale of cars with internal combustion engines, battery electric took a market share of new registrations of around 16.6% in 2022.

That meant it surpassed diesel for the first time to become the second most popular powertrain after petrol.

Some 23% of all new cars registered were plug-in vehicles, which includes pure electrics and plug-in hybrids.

The SMMT forecast that new car registrations would rise to 1.8 million this year - up from 1.6m in 2022, reflecting the pent-up demand and easing of global supply chain difficulties which include the end of punitive COVID restrictions in China.

Its chief executive, Mike Hawes, said 2022 was "a very difficult year".

"Manufacturers have really struggled to be able to make the vehicles in sufficient quantities, primarily due to semiconductor shortages but there are other parts shortages behind that as well.

"Lockdowns in China have not helped, high logistics costs, more pressure on raw materials.

"The complexities of global manufacturing have really been brought to bear heavily on the industry this past year."

He added: "The automotive market remains adrift of its pre-pandemic performance but could well buck wider economic trends by delivering significant growth in 2023.

"To secure that growth - which is increasingly zero emission growth - government must help all drivers go electric and compel others to invest more rapidly in nationwide charging infrastructure."