Despite a 5.1 per cent fall in the market in the fourth quarter, annual transactions were the second highest following the all-time record set in 2016.
Smaller cars continued to be the most popular, with superminis representing a third (33.5 per cent) of all transactions, while demand for minis grew 4.3 per cent.
SUVs enjoyed the strongest growth, rising 9.5 per cent, the SMMT said, however, apart from executive cars, up a marginal 0.02 per cent, all other segments experienced declines.
Demand for petrol-electric hybrid cars was up 22.2 per cent to 73,864, and zero emission electric vehicles rose 77.1 per cent, with 10,199 changing hands in the year.
Despite a 4.3 per cent decline, petrol retained its position as the most popular fuel type with a 58 per cent market share, while used diesel car transactions rose 3.3 per cent, with more than 3.3million motorists (40.8 per cent of buyers) investing in one.
Across the UK, the majority of used car transactions took place in the South East, with more than 1.2 million vehicles finding new owners in the region, followed by the North West and West Midlands.
The UK’s best-selling used model remained the Ford Fiesta, closely followed by the Ford Focus and Vauxhall Corsa.
SMMT chief executive Mike Hawes said: “Britain’s used car buyers are enjoying more choice than ever, and it’s great to see millions of people taking advantage of the low emission, safety and convenience technology filtering into this market.
“While such healthy demand is reassuring, to keep it that way and accelerate renewal throughout the fleet – the fastest way to improve air quality – government must now restore confidence to the new car sector.
“Given the recent economic and fiscal uncertainty, particularly over diesel, consumers and businesses need clarity to encourage them to move out of their older vehicles and into newer, lower emission cars – whatever their fuel type.”