Fleet and business registrations fell 14.4% and 33.6% respectively in November in an overall market that fell 11.2% year-on-year.
According to the figures released by the Society of Motor Manufacturers and Traders (SMMT), it was the eighth consecutive month the UK new car market had declined. 163,541 vehicles were registered, with the fall driven by a significant fall in diesel demand.
Registrations fell across all body types except specialist sports, which grew 6.7%.
The biggest declines were seen in the executive and mini segments, which decreased 22.2% and 19.8% respectively, while demand in the supermini segment contracted by 15.4%.
The alternatively fuelled vehicles (AFV) sector, however, continued to make significant gains, growing 33.1%.
Petrol cars grew 5.0%, but these increases could not, however, offset the 30.6% drop in diesel registrations.
The decline follows months of confusion and speculation about the government’s air quality plans and its policies towards diesel cars.
Overall, registrations have declined -5.0% in the 11 months in 2017, with 2,388,144 cars hitting British roads so far this year.
Mike Hawes, chief executive of the SMMT, said: "An eighth month of decline in the new car market is a major concern, with falling business and consumer confidence exacerbated by ongoing anti-diesel messages from government.
"Diesel remains the right choice for many drivers, not least because of its fuel economy and lower CO2 emissions.
"The decision to tax the latest low emission diesels is a step backwards and will only discourage drivers from trading in their older, more polluting cars.
"Given fleet renewal is the fastest way to improve air quality, penalising the latest, cleanest diesels is counterproductive and will have detrimental environmental and economic consequences."