NEW car sales crashed by 26 per cent last month, in the latest stark signal of belt-tightening among consumers.
Registrations in Scotland were down to 29,014 in September compared with 39,218 a year ago as the industry complained of its "most difficult economic conditions" for 17 years.
The sales fall was more marked north of the Border than in the rest of
the UK, which recorded a 21 per cent reduction with figures down for the fifth month in a row.
Sales were also at their lowest September level since the twice-yearly number plate change was introduced nine years ago.
The Society of Motor Manufacturers and Traders (SMMT), which represents the UK industry, said car sales were one of the first casualties of an economic downturn because cars were the second largest purchase – after houses – for many consumers.
It said: "The car market is highly vulnerable to changes in discretionary spending, and falling consumer confidence is damaging demand."
The SMMT said recent news in the banking sector, a further slowdown in the housing market and rising levels of unemployment had knocked confidence.
It said: "It may be some time before it is restored, unless swift action is taken."
Among the worst-hit manufacturers were Land Rover and Renault, which saw sales halve to 4,907 and 10,454 vehicles respectively last month.
Audi and Jaguar were among the few manufacturers to record a modest increase in sales.
However, the biggest winner was Smart, with a 9 per cent increase to 1,015 vehicles sold in the mini-size cars sector – the only one to record an increase.
Other models posting growth were Hyundai's i10 and the Vauxhall Agila.
Luxury saloons took the biggest hit, with sales down by 43 per cent.
Ford has introduced a four-day week until the end of the year at its Transit van plant in Southampton.
Other companies, including Jaguar Land Rover, are also cutting back on production.
Sue Robinson, director of the Retail Motor Industry Federation's National Franchised Dealers Association, said: "While consumer confidence remains low, all retailers, including car dealers, will find trading conditions tough, so it is essential the government works to return stability and confidence to the whole economy.
"For the economy to recover, interest rates must be cut, confidence needs to be returned to the banking system and consumers need to feel safe in their jobs.
"However, it is vital that the impact of any interest rate cuts reaches the consumer for there to be any effect."
A motoring group called on the government to introduce a cash incentive scheme to encourage motorists to replace old cars with new ones, claiming it would help reduce vehicle emissions and boost new car sales.
Edmund King, the president of the AA, said: "A vehicle scraping scheme has the potential to cut emissions and reduce accidents and their severity whilst giving a boost to the UK motor industry."
Theresa Villiers, the shadow transport secretary, said: "These figures are disastrous news for the car industry. They show that the nation's economic problems are by no means confined to the banking sector but are spilling over into manufacturing.
"A new car purchase will often be one of the first casualties when families are feeling the pinch.
"The government needs to wake up to the serious problems in one of the most important parts of the UK's manufacturing industry and ensure that the regulatory climate doesn't make the situation worse for our hard-pressed vehicle manufacturers."
The full article contains 592 words and appears in The Scotsman newspaper.
