In total, 163,898 new cars were registered in the month, with year-on-year demand growing by 1.2% as the market stabilised following a turbulent first six months.

But diesel sales fell by a quarter (24%) due to tax hikes and potential clean air surcharges.

Demand for petrol cars grew by 20%, while alternatively fuelled vehicles (AFVs) enjoyed an uplift of 21%, according to the figures from the Society of Motor Manufacturers and Traders (SMMT).

Growth was particularly strong for plug-in hybrids, up by a third (33%), while hybrid registrations grew 17%, followed by battery electric cars, up 2%.

Year-to-date, the new car market remains down by -5.5%. In the first seven months of the year, 1.48 million new cars were registered by consumers and businesses in the UK compared to 1.56 million for the same period in 2017.

Best sellers for July were the Ford Fiesta and the Volkswagen Golf.

Mike Hawes, SMMT chief executive, said: “The feel-good factor from a sun and sport-packed July, combined with some fantastic deals on a raft of exciting new models, clearly helped keep showrooms relatively busy last month.

“It’s great to see alternatively fuelled vehicles benefiting from this growth, and government’s acknowledgement of the vital role new-tech diesel will play in its Road to Zero strategy should help even more motorists benefit from the latest, safest and low emission technology over the coming months.”

‘Has diesel’s fate been sealed?’

Alex Buttle, director at car buying comparison website Motorway.co.uk said: “While it’s encouraging that AFV sales have hit record levels, diesel sales have plummeted faster than perhaps anyone expected.

“And without a new catalyst for resurrection planned by the industry or government, and the major manufacturers focused on their plans for electric and hybrid development, has diesel’s fate been sealed?

“There’s only one direction diesel sales are going sadly and that’s downwards. This trend is beginning to feel irreversible.

“July 2018 was the 16th consecutive month of negative sales figures, and the 13th month where sales have fallen more than 20%. In November 2016, diesel had more market share than petrol, but now its market share has fallen so rapidly that it lags petrol by 30%.

“Sales in petrol and AFVs are taking up some of the slack from faltering diesel sales, but there’s a lot of slack to pick up.”

Related: See YourMoney.com’s Is it worth buying a diesel car? for more information.