The latest data from the Society of Motor Manufacturers and Traders (SMMT) shows that in 2014, new cars averaged just 124.6g/km, beating last year’s record average by 2.9% and 2007 levels by almost a quarter (24%). The figure is also 4.2% below this year’s EU-wide target of 130g/km.

The SMMT attributed to the decline to the shift to more efficient diesel and petrol engines as well as significant growth of the alternatively fuelled vehicles (AFV). Sales of plug-in vehicles increased fourfold to 14,498 in 2014 and, for the first time, the UK surged ahead in Europe, registering more new plug-ins than any other country. By the end of the year, there were 52,000 AFVs, including hybrids, plug-ins and range extenders, on the road – a 58.1% increase on 2013.

However, the SMMT said the figures raise questions about the future shape of taxation and incentives in the UK. The organisation has also published a report by the Centre for Economics and Business Research (Cebr), which suggests that three new VED bands should be introduced to reflect the most efficient cars, while a new emissions tax should be introduced for vans.