Business consultancy Grant Thornton is warning that the new car sales bubble may burst in the near future unless manufacturers scale back their volume ambitions.

The warning comes as data showed that new car sales were up 12% in February – the 36th month of growth.

Commenting on the market, Richard Parkin, automotive industry consultant at Grant Thornton UK, said: “Today’s figures are further evidence of a solid recovery across the UK economy. The fact that consumers, as well as businesses, have continued to invest in vehicles is indicative of their confidence in the economy over the mid to longer term.

“However, a looming general election – one of the most unpredictable in modern memory – along with continued uncertainty across the Eurozone, may well foster uncertainty in the market, and this may dampen demand. We can expect the sales records to continue for a few more months, but unless manufacturers begin to scale back their sales volume ambitions, the bubble may burst in the not so distant future.

“Over-capacity in European car production remains, forcing OEMs to discount their products in order to achieve sufficient sales – a factor which will have contributed heavily to today’s figures. Despite producing over 1.5 million cars annually, UK sales are predominantly models imported from the Eurozone.

“As the pound has steadily appreciated against the Euro over the past two years, with a more dramatic depreciation of the Euro in recent months as a result of quantitative easing by the European Central Bank, this has made Eurozone-built cars ever more affordable for UK buyers and driven demand.

“Given the nature of the automotive purchasing cycle – both in a consumer and business fleet context – we can expect a tempering of new vehicle registrations later in the year. Plant production volumes for 2015 are, for the most part, set in stone – the cars will be built, it’s just a case of where they are sold, and high UK sales (>2.5m units) have already been factored in to these calculations.”