The UK car industry breathed a sigh of relief last week with news that new car registrations breached two million units for the first time since 2008. The final figure of 2,044,609 units was a four-year high.

Discounts played their part as heavily discounted stock was shifted from mainland Europe’s declining markets to the UK, but consumer confidence was also required to buy cars in these pre-downturn volumes.

Indeed, overall year-on-year market growth of 5.3 per cent was driven by a 12.9 per cent rise in private sales according to Society of Motor Manufacturers and Traders (SMMT) figures.

So what has instilled this consumer confidence? All the classic factors for growth are there, despite the general doom and gloom of austerity across the rest of the economy.

Although salary rises are falling short of inflation, for those with disposable income there are few investment opportunities. House prices are high and unemployment is low, with job security also increasing as the UK exits a double-dip recession. Savings interest rates are low, and there is also little return on stocks, despite recent improvements.

Throw in a dealer discount, running-cost savings and a more diverse selection of vehicles than ever to choose from, and buyers are being tempted back, especially those who before the downturn would buy a new car on a three-year cycle but have since held on to their car for longer.

SMMT chief executive Paul Everitt believes such factors make this an “attractive time to buy”, in a market that grew stronger in each quarter.

“There’s been a build-up in the market of people who used to buy cars regularly seeing now as the time to go back,” he said. “They are looking at a new car as a sound investment again, particularly with the typical 15 to 20 per cent improvements in running costs they can expect compared to their five to six-year-old car.”

With so many offers, 2012 was very much a buyer’s market — a trend that’s set to continue as the eurozone crisis looms. “While volumes are good, margins [for dealers and manufacturers] are not great,” concedes Everitt. “But given the choice we’d want the volume — it’ll never be a perfect balance. We need people to buy cars.”

Should the economy remain stable, Everitt thinks a small increase in new registrations can be expected in 2013, although the heady days of 2003 when almost 2.6m new cars were registered is a figure unlikely to be matched soon.

“We’ve gone through a very difficult period which has resulted in significant adjustment in the market,” said Everitt. “The average has been around 1.9m units, so anything above 2.0m is a good result.”