Lord Mandelson faced demands from car manufacturers and unions for the taxpayer to pay a Dutch-style “wage subsidy” to reduce job losses in the beleaguered sector, at a motor industry summit held on Wednesday.

The meeting coincided with more bad news on jobs and production from the sector, which is seen by ministers as a core element of the UK’s manufacturing base. GKN, the motor parts and aerospace group, announced plans to axe a further 1,400 jobs globally. Toyota, which employs about 4,500 workers in the UK, became the latest carmaker to open talks with staff on cutting production.