Last year's new car sales increased by 5.3% compared with 2011, according to figures from the Society of Motor Manufacturers and Traders (SMMT).
The figures show that Britain's car market recorded its strongest annual sales since 2008.
Despite the encouraging increase in sales accounting for 2,044,699 new car registrations the number of vehicles sold is almost 15% less than in 2007 just prior to the global economic crisis.
The SMMT says the increase in sales has been driven by private buyers; this sector of the market is up by 12.9%, or around 106,000 cars. However, the SMMT is predicting that the market will slow down in 2013, with total sales expected to plateau.
The Ford Fiesta was 2012's best-selling car, with sales of 109,265. The Vauxhall Corsa was second with 89,434 sales, while the Ford Focus (83,115), Vauxhall Astra (63,023) and Volkswagen Golf (62,021) completed the top five.
It was also revealed that the average CO2 emissions of new cars sold in the UK last year was 133.1g/km 20% less than a decade ago.