Last month was the weakest July for new car sales since 1998, new figures show.

Just 123,296 new cars were registered in the UK last month, the Society of Motor Manufacturers and Traders (SMMT) said.

That represents a 29.5% decline on July 2020.

The SMMT said the decrease was “artificially heightened” as sales spiked during the same month last year as showrooms were opened for a full month for the first time since the first coronavirus lockdown.

However, last month’s total was down 22.3% on the 2010-2019 average for July as the global shortage of semiconductor chips and the rise in the number of people instructed to self-isolate impacted supply and demand.

Growth in plug-in vehicles continued, with battery electric vehicles accounting for 9.0% of all registrations, while the market share of plug-in hybrids reached 8.0%.

The SMMT has downgraded its outlook for the number of registrations across the year as a whole to around 1.82 million.

This would represent an 11.7% increase on last year, but is down from the 1.86 million forecast in April.

SMMT chief executive Mike Hawes said: “The automotive sector continues to battle against shortages of semiconductors and staff, which is throttling our ability to translate a strengthening economic outlook into a full recovery.

“The next few weeks will see changes to self-isolation policies which will hopefully help those companies across the industry dealing with staff absences, but the semiconductor shortage is likely to remain an issue until at least the rest of the year.

“As a result, we have downgraded the market outlook slightly for 2021.

“The bright spot, however, remains the increasing demand for electrified vehicles as consumers respond in ever greater numbers to these new technologies, driven by increased product choice, fiscal and financial incentives and an enjoyable driving experience.”

Jim Holder, editorial director of magazine and website What Car?, said: “The appetite for car buying is clearly there, particularly as people reward themselves after lockdown.

“But the challenge is for manufacturers and retailers to manage customer expectations and to build pipelines in the meantime, while supply is limited.

“Ultimately, the supply issues will lift – but only those who have invested in servicing customer expectations will be in a position to reap the rewards as they do so.