New car registrations fell 21.2 per cent in the UK last month compared with December 2007, but the pace of decline was less than the expected 35 per cent.
The Society of Motor Manufacturers and Traders said the cut in value added tax from 17.5 per cent to 15 per cent on December 1 may have been a contributory factor in the smaller than expected dip in sales.
Until December, the slide in car sales had accelerating, from a fall of 18.6 per cent in August to a 36.8 per cent drop in November.
Last month’s figures brought the total for 2008 to 2,131,795 vehicles, down by 272,212 and the lowest total since 1996.
Paul Everitt, SMMT chief executive, said the UK industry had faced “unprecedented challenges” in 2008 as a result of the credit crunch. He called for increased government intervention to support the banking sector and boost demand.
“Further action to ease access to finance and credit across the economy is essential if long-term damage to valuable industrial capability is to be avoided,” he said.
The SMMT forecast a further decline this year to 1.78m vehicles, which would be the lowest since 1992.
Carmakers have been cutting output as stocks of unsold cars mushroom – cutting staff, reducing shifts, taking extended breaks over the holiday season and announcing prolonged shutdowns in the early months of 2009.
The crisis has spread to component manufacturers and car dealerships, with a series of profits warnings through the final months of 2008.
The motor industry has been urging the government to launch a multi-billion pound support package to ease the financing squeeze and avoid further shut-downs and job cuts.
“2009 will be another difficult year for the UK automotive industry with new vehicle registrations and production significantly reduced,” said Mr Everitt.
“The industry faces these challenges stronger and more resilient than in recent memory. The extraordinary circumstances we currently face mean that government support will be required to take advantage of global economic growth when it returns.”
The better-than-expected UK figures contrasted with much bigger falls elsewhere in the final month of 2008. Earlier this week, all the leading US carmakers reported declines of more than 30 per cent in December, while sales in Japan dropped 22 per cent to the lowest December level on record.
In Europe, registrations fell by almost half in Spain, by 24 per cent in France and 13.2 per cent in Italy.
