The Society of Motor Manufacturers and Traders will announce that 1997 sales were up by 7 per cent on the 2.025 million recorded in 1996.
Registrations in December reached 84,000 cars, up from 78,141 recorded during the same month in 1996, according to industry sources.
But despite the increase, the market remains below its peak of 2.3 million sales recorded in the boom year of 1989 and the 2.2 million in 1988. The SMMT figures will show that imports grabbed a rising share of the market, accounting for more than 65 per cent of total sales.
The Retail Motor Industry Federation (RMIF) said building society windfalls and booming consumer confidence had boosted the market, offsetting the rises in interest rates. But Christopher Macgowan, the RMIF's chief executive, predicted sales would drop back slightly to 2.15 million this year as optimism ebbed. "1998 will not be as strong as last year, but the industry will remain remarkably resilient," he said.
Rover's market share, including Land Rover, is expected to have fallen to less than 10 per cent for the first time since the formation of British Leyland in the 1960s. The group, owned by BMW, is likely to reveal sales of between 214,000 and 215,000 for 1997, down from 222,000 in 1996, when Rover grabbed almost 11 per cent of the market.
The company will point to its decision to reduce its dependence on heavily discounted fleet sales to companies. Sales to private buyers improved last year, accounting for some 60 per cent of Rover's total UK registrations. Five years ago Rover's private sales were less than 50 per cent.
BMW yesterday said Rover's worldwide sales last year had risen from 507,000 to 523,000, with rising demand from Italy, Japan and the US.
The German group said its total global sales would show a rise of 4 per cent, to 1.2 million.
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