Sales of small, fuel-efficient cars jump ahead as consumers seek to cut costs

Hybrid cars also showed strong growth as sales across the motor industry increased 7.6% on a year ago, the SMMT said

The Ford Fiesta remains Britain's best-selling car

Sales of small, fuel-efficient cars jumped in January as cash-strapped consumers sought to cut the costs of motoring, according to the latest industry sales figures.

Hybrid cars that use electric batteries to supplement their petrol engines also showed strong growth as sales across the industry increased 7.6% on a year ago.

The Ford Fiesta maintained its four-year dominance over the Focus to retain the accolade as Britain's best-selling car, followed in third place by the Vauxhall Corsa and VW Golf and Polo brands.

The largest car in the top 10 was the Nissan Qashqai, which has a reputation for being one of the most fuel efficient in its class.

The Society of Motor Manufacturers and Traders (SMMT) said January saw a further push by consumers to increase the fuel efficiency of their cars.

Mike Hawes, the SMMT's chief executive, said: "As fuel economy is a major consideration for many motorists, ongoing investment by vehicle manufacturers in innovative, fuel-efficient technology is a key factor in the growing demand for new cars. Looking ahead, the UK automotive industry expects to see moderate, sustainable growth in 2014."

Carmakers sold 154,562 vehicles last month compared with 143,643 a year ago, giving the industry a lift after 2013's bumper sales.

This was a 23rd successive monthly increase and followed an overall increase of 10.8% in 2013 when registrations reached a six-year high of 2,264,737.

Hawes noted that alternatively fuelled vehicle registrations, a category which is dominated by hybrid cars, increased 25% over January 2013.

Howard Archer, chief UK economist at IHS Global Insight, said private new car sales led the way, rising 17% year-on-year in January, supported by a combination of rising consumer confidence, a buoyant jobs market, cheap finance deals, and motorists' desire to buy more fuel efficient cars given relatively high petrol prices.

He said: "The motor industry will be hoping that recent robust UK economic activity is sustained and extended, and that this underpins consumer and business confidence, and their willingness to splash out on new cars.

"Car manufacturers and garages will certainly be very pleased to see that consumer confidence jumped to a 76-month high in January, with consumers' opinion of the climate for making major purchases rose sharply in January to be at its highest level since December 2010. In addition, markedly rising employment is supportive to car sales.

But he added a cautionary note, saying consumers were still strapped for cash while wage rises remained below inflation. "The squeeze on consumers' purchasing power has so far only eased modestly as, while consumer price inflation has come down, earnings growth is yet to see any meaningful pickup," he said