Britons flocked to car showrooms in record numbers last year, boosting annual sales to more than 2.5m for the first time, figures due out today will show.
The Society of Motor Manufacturers and Traders expects the market to cool in 2003, with sales down to 2.3m as motorists fret about the uncertain economic outlook.
UK car sales reached a record 2.46m in 2001 and surpassed that peak in 2002, with December sales performing better than expected after a relative slide in September, October and November.
"We expect to see a lower level of demand in 2003 but we don't expect it to fall off a cliff - which is the overriding fear among retailers as a whole," said Paul Everitt, SMMT chief economist.
That relatively buoyant mood contrasts with a gloomy picture in the US where, as the Detroit motor show continues, car manufacturers are being forced to retain incentives to boost sales - at a renewed cost to profitability.
A study of 100 car industry executives released by consultancy KPMG today shows that hopes for a global recovery have been pushed back two years, with a return to profitability unlikely before 2005.
Mike Bacon, senior partner in KPMG's automotive practice, said: "Executives no longer see profitability rebounding any time soon, both as a result of the economic downturn and of consumers' expectations for rebates, special pricing and other financial arrangements."
With North American brands such as General Motors and Ford expected to lose market share to European and Japanese rivals, BMW's Mini crowned a year of stupendous growth by being named car of the year, in its Cooper version, in Detroit.
The Mini recorded global sales of 144,000 in 2002, boosting overall BMW figures by 17% over the year to 1.06m, while rival Mercedes, part of DaimlerChrysler, saw its sales rise marginally to 1.23m. Volkswagen sales dipped 2% to 4.98m last year but it will shift more than 5m vehicles this year, the German group said in Detroit.
GM, the world's biggest manufacturer, tried to match BMW, Mercedes and VW by unveiling the Sixteen Cadillac, a super-luxury car designed to rival the new Rolls-Royce Phantom, Mercedes' Maybach and VW's Phaeton.
Mr Everitt said such models were highly profitable even if sold in small numbers and sales were untroubled by external economic factors because buyers were insulated from any downturn.
In Britain, according to Mr Everitt, high levels of employment and historically low interest rates will combine to offset concerns about the housing market to maintain car sales at healthy levels.
"We have not seen falls in house prices, which is the area where people start to feel anxious, and the economic fundamentals are good," he said.
He suggested that rising fleet sales - stimulated by last year's tax changes - should offset any decline in private purchases.
