Car sales in the UK slumped 21 per cent last month as the industry’s main trade body gave warning that carmakers are struggling with the worst economic conditions for 17 years.

It is the fifth consecutive fall in sales of new cars in Britain and all the more disappointing for the industry because manufacturers had hoped for a boost from the new registration plate, which was issued in September.

Car registrations numbered 330,295 last month, down from 419,290 in September 2007. New registrations fell an annual 18.6 per cent in August to record their weakest showing since 1966.

The Society of Motor Manufacturers and Traders (SMMT) called for urgent government action to restore consumer confidence. Paul Everitt, chief executive of the SMMT, said: “Government action is now needed to restore consumer confidence and boost demand in the real economy. The Chancellor’s pre-Budget report should set out a package of measures to boost demand for new fuel-efficient cars and scrap plans for unfair increases in car tax.”

Although sales slid across all types of vehicles, premium brands were again heavily hit. Land Rover fell 49 per cent; Toyota’s luxury brand Lexus fell 44 per cent; Bentley plunged 47 per cent and Alfa Romeo fell 44 per cent.

New car sales in Britain have fallen 7.5 per cent this year as the past few months have reversed a robust start to the year.

The SMMT is to press the Government for decisive action to help the industry amid rapidly falling demand. Their call comes after the head of Land Rover and Jaguar last week urged the Government to follow the lead of the US and pump cash into the economy and the car industry for green initiatives.

It is believed that sales fell as far as 25 per cent towards the latter part of the month but then picked up in the last couple of days. Some industry insiders believe that the pick up was down to carmakers buying their own stock and preregistering the vehicles to make their sales appear slightly more robust. Preregistering can only provide a short-term flattering effect, however, because the cars then have to be sold as nearly new at reduced prices.

The gloomy British car sales figures follow a downbeat launch of the Paris Motor Show last week, during which many of the leading manufacturers said that global markets are in a dire state.

Many British-based carmakers are on short-time working to reduce their output in line with falling demand.

Car sales are being hit by three main forces: poor consumer confidence because of the credit squeeze; a lack of finance for those people who do want to buy; and higher prices for fuel.

Paul Everitt, chief executive of the SMMT, said that the Government needed to act to restore consumer confidence. Along with a cut in interest rates, he called for action to force the banks to pass on any interest-rate cuts. He also said that energy and fuel suppliers should be pressed to pass on recent cuts in the price of fuel.

Mr Everitt said: “The key issue for us as an industry is that consumer confidence is shattered. The Government needs to address the real economy as well as the financial system and restore consumer confidence and demand in the real economy.”

The car industry also wants a reversal of the plans to levy more vehicle excise duty, warning that increases for bigger cars and the implementation of a so-called showroom levy would deter buyers further.

Fears are growing among manufacturers that a substantial downturn in the UK automotive industry — Britain’s biggest industry — will lead to the collapse of some companies in the supply chain.

British-based carmakers export a large proportion of their output, but overseas they also are facing increasingly difficult markets. The UK car market is being particularly hard hit because of the greater weakness in consumer confidence and the strong part played by housing in the economy.

Mr Everitt said: “It’s important to stress that this is not just a UK issue but, from a production point of view, we are facing an increasingly challenging set of circumstances.”

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