Buoyant March new car sales in the UK were driven by rising consumer confidence, new product launches, lucrative financing schemes, dealer incentives and attractive personal contract purchase deals, a London based analyst said.

"The UK’s consumer confidence in March rose to its highest level in more than 12 years," said Ernst & Young automotive & transportation analyst Anil Valsan.

The country’s GDP grew 0.6% quarter on quarter in the fourth quarter of 2014, marking the eighth consecutive quarter of growth. However, Valsan noted, "the pace of growth eased as compared to the previous quarter, owing to a contraction in the construction, mining and energy supply industries. Nevertheless, full-year GDP growth stood at 2.8% in 2014, marking the highest pace of growth since 2007".

The increase was driven by an expansion in production, services and household spending, coupled with strong growth in exports. The unemployment rate declined to 5.7% in the three months to January, with the number of employed people at a record high.

During the period, sales to fleet buyers (accounting for 48.3% share) increased by 14.6%, while sales to private buyers (47.9%) increased by 1.1%. However, sales to business buyers (accounting for 3.9% share) saw a decline of 8.4%.

Valsan said diesel car sales (accounting for a 47.6% share) grew by 4.4% while petrol car sales (49.6%) grew by 7.0%.

"However, consumers are gradually moving away from diesel cars due to an impending action against older diesel vehicles, and problems of air pollution primarily caused by diesel-powered engines. Sales of alternate fuel vehicles grew at a strong 62.6% (albeit on a low base, accounting for 2.8% of overall sales). These were driven by rising government support for ultra-low emission vehicles (charging infrastructure and subsidies) and new model launches, coupled with a growing desire for reduced costs and greater efficiency."

Valsan added: "GDP is expected to witness a growth of 2.5% on the back of falling oil prices that will continue to boost household spending. However, uncertainty around the upcoming elections in May and the renewed issues in the eurozone are expected to pose risks to the magnitude of growth.

"Low financing rates, along with continued incentives from automakers and dealers, are expected to drive car sales in 2015. However, with an extended period of consistent growth, car sales are expected to level off during the year, and are likely to witness a moderate growth of 1%–2%."