October new car sales in the United Kingdom fell 5.9% to 170,866 from 181,589 a year ago. For the first 10 months, sales dipped slightly to 2,250,822 from 2,254,539 a year previously.

Diesel car registrations hit a monthly high with a 37.2% market share. October diesel registrations climbed 17.7% to 63,511 units.

SMMT chief executive, Christopher Macgowan said: "Despite a dip in October the new car market is still running parallel with last year's record total. We expect a slight upturn in November figures which will leave the increasingly strong December market as the decider. Will it be another record year? It's too close to call."

More weekends in October meant two less selling days, which impacted on sales. Two extra selling days in November should put the market back on track to end 2004 similar to last year's record level, the SMMT said.

Large fleet and business volumes rose in October while year-to-date sales to private buyers dipped 4.4%.

UK-built cars took 17.8% of the October market and 18.3% year-to-date.

The SMMT expects modest volume growth in November and hopes December sales will continue a recent upward trend.

December sales have grown from 84,582 units in 1999 to 155,452 units in 2003 - a rise of 84%. Volumes have averaged 123,777 units over this period. December's share of the annual market between 1999 and 2003 moved from 3.8 to 6.0%.

The Ford Focus returned to the top of the UK best sellers' list in October, outpacing Renault's Mégane by only 144 units after Mégane volumes soared 76%. Lower medium sector cars took the first four places in October as the segment grew by 6.7%.

Last month's top seller, the Vauxhall (Opel) Corsa slipped to sixth spot in October. Sports cars, MPVs (minivans) and dual purpose 4x4s (SUVs) continued to show good gains, with volumes up 11.9, 3.8 and 8.4% respectively in October.

Diesel volumes have risen in 49 successive months, up 17.7% to 63,511 units in October, and by 19.4% over the year-to-date.

The Ford Focus is the top selling diesel model year-to-date, but dropped to fourth in October, as VW's new Golf led the sector, perhaps reflecting the availability of the full redesigned model range and the option of both manual and automatic (DSG) gearboxes.

"The outlook remains positive, but the growing impact of higher base rates and the knock-on effect on the housing market is expected to cause new car demand to cool in the next two years," the SMMT said.

"The market will remain well above the 2.2 million trend seen around the turn of the millennium, at 2.465 million units in 2005 and 2.4 million units in 2006.

"Diesel penetration is expected to climb 35% in 2005. Diesels will benefit from wider availability - particularly of Euro 4 spec cars which have better company tax benefits. Penetration is not, however, expected to hit levels witnessed across the EU where duty rates are far more favourable."