Worst year in a decade for UK car sales

New car sales in Britain fell by more than a fifth year-on-year in December to cap the worst year for the industry in more than a decade, trade figures showed on Wednesday.

The Society of Motor Traders and Manufacturers said new car registrations fell an annual 21.2 percent last month. New car registrations in 2008 were 11.3 percent lower than in 2007 — the worst full-year performance since 1991. Automakers across Europe are feeling the pain as the economic downturn curbs consumer spending on big-ticket items. In Germany, new car sales fell last year to their lowest level since reunification.

"The global economic downturn, precipitated by the crisis in the international banking and finance sector, created unprecedented challenges for the UK automotive industry in 2008," said SMMT Chief Executive Paul Everitt.

He predicted 2009 would be another difficult year, with new vehicle registrations and production "significantly reduced".

The Bank of England has already slashed interest rates to 2 percent, their lowest level since 1951, and is expected to cut them again this week.

However, with no sign of a recovery in demand, car makers across the world have been forced to lay off workers or cut working hours.

Jaguar Land Rover, owned by Tata of India, has cut production at its Solihull, Halewood and Castle Bromwich plants, Ford has moved its Southampton plant to a four-day week, while Nissan has moved many staff to part-time work.

Trade unions have called on the government to step in to support an industry which they say employs tens of thousands directly and indirectly through suppliers.

The United States has already announced a $17.4 billion loan package to rescue its stricken automakers.

British car dealer Lookers issued a profit warning last month and scrapped its final dividend, blaming increasingly tough trading conditions in both new and used car markets.