UK vehicle production plunged 35.5% to 108,569 units last month as the credit crunch really began to bite. Car output was off 33.3% to 97,604 units while commercials plunged 50.2% to 10,965.

The extend of the the fourth quarter demand drop-off is reflected in year to date numbers showing that overall production was down just 2.7% to 1,589,402 for the first 11 months of 2008. Car production was also off 2.7% to 1,392,796 and commercials down 2.3% to 196,606 vehicles.

"The UK motor industry is facing unprecedented challenges and urgent action is now required. The sector has seen falls in demand, extended plant closures and the first signs of redundancies in the supply chain," said Society of Motor Manufacturers and Traders (SMMT) CEO Paul Everitt.

"Without swift action and the ability to access credit and finance, significant damage will be done to the nation's industrial capability - leaving the UK poorly equipped to take advantage of any global growth when it returns."

Many manufacturers have cut output by reducing shifts, laying off temporary workers and extending Christmas holiday shutdowns. General Motors' Vauxhall and Tata group's Jaguar Land Rover have approached the government for help while the SMMT has requested a freeing up of credit to boost sales.

The Wagon component making group has also failed recently and there have been profit warnings and outlet closures in the auto retailing sector.