New figures from the Society of Motor Manufacturers and Traders (SMMT) show a 39.5% year-on-year drop in new car registrations last month, making it the sector's "worst start to a year" since 1970.
A total of 90,249 new cars were registered in the UK last month, down from 149,279 in January last year - two months before the country went into its first lockdown, when the pandemic took hold.
Now, in the third nationwide lockdown, the enforced closure of showrooms continues to have an impact, with the SMMT recording sharp declines across several segments despite the lockdown rules allowing dealerships to operate a click-and-collect service.
"Opening dealerships as soon as it is safe to do so would help re-energise consumer confidence, supporting jobs and a green recovery," said the SMMT, noting that any drop in registrations has a knock-on effect on the manufacturing sector.
The organisation has now revised its forecast for 2021, predicting 1.9 million registrations for the year, down more than 100,000 units, highlighting that while this would still be an increase of 15.7% over 2020, it "would be a very subdued market in historical terms".
SMMT chief executive Mike Hawes called on the government to allow showrooms to reopen as soon as possible: "Following a £20.4 billion loss of revenue last year, the auto industry faces a difficult start to 2021. The necessary lockdown will challenge society, the economy and our industry’s ability to move quickly towards our ambitious environmental goals.
"Lifting the shutters will secure jobs, stimulate the essential demand that supports our manufacturing, and will enable us to forge ahead on the Road to Zero. Every day that showrooms can safely open will matter, especially with the critical month of March looming."
Private sales dropped 38.5% year on year, with fleet sales falling further still, at 39.7%, and business sales plummeting by 56.0%.
Conventionally fuelled cars experienced the most significant declines, with demand for petrol models falling by 50.6% and diesel 62.1%, but the SMMT noted that, "on a positive", electrified vehicle uptake grew substantially during the period.
Some 6124 plug-in hybrids were sold in January, up 28% on the same month in 2020, and the uptick was even more dramatic for pure-electric cars, which accounted for 6260 registrations - up from 4054 last year. That trend can be partially attributed to the fact that there were 40 mainstream pure-electric cars on sale last month, compared with just 22 in January 2019.
Combined, plug-in hybrids and fully electric cars accounted for 13.7% of all new car registrations and they are expected to make up more than one in seven registrations this year.