A total of 426,170 new cars were registered last month, according to the Society of Motor Manufacturers and Traders (SMMT).
It is the first time the key September market has fallen in six years.
The SMMT blamed a fall in consumer confidence caused by economic and political uncertainty, and confusion over air quality plans – which it said had “inevitably led to a drop in consumer and business demand for diesel vehicles”.
The data showed demand for diesel cars fell by more than a fifth (21.7%) to 170,732, down from 217,974 new vehicles registered in September last year.
September is usually a big month for new car sales because the market tends to receive a boost from the release of the latest number plates – with the month accounting for 20% of total sales.
Total car sales in 2017 have so far reached 2.1m – down 3.9% on the same period last year.
SMMT chief executive Mike Hawes said: “September is always a barometer of the health of the UK new car market so this decline will cause considerable concern.
“Business and political uncertainty is reducing buyer confidence, with consumers and businesses more likely to delay big ticket purchases.
“The confusion surrounding air quality plans has not helped, but consumers should be reassured that all the new diesel and petrol models on the market will not face any bans or additional charges.
“Manufacturers’ scrappage schemes are proving popular and such schemes are to be encouraged given fleet renewal is the best way to address environmental issues in our towns and cities.”
Car sales across the UK fell for the sixth month in a row in September, down by 9.3% on the same month last year, figures show.