Although this is the lowest figure since 1995, the number of sales were boosted in the second half of the year by the scrappage scheme and the yearly figure is significantly higher than early expectations.
The scrappage scheme has accounted for more than 20% of all new car registrations
since it was implemented in May 2009
The scrappage scheme, which offers a £2,000 incentive to scrap old cars, has accounted for more than 20% of all new car registrations since it was implemented in May 2009.
In the first six months of the year, new car sales fell by 25.9%. In the second half of the year, they rose by 21% thanks to the scheme.
However, the scheme is due to end in February and there are fears in the industry over the damage that this could cause.
"Another tough year awaits the UK motor industry in 2010, with new car registrations expected to be below 2009 levels and only limited recovery in the van and heavy commercial vehicle markets," said SMMT chief executive Paul Everitt.
"Sustaining the progress made in the latter part of 2009 will require stronger demand from fleet and business buyers, alongside the greater availability and affordability of credit and finance."