New car registrations in the UK slumped by 30.9% year-on-year in January to stand at 112,087 units, intensifying industry calls for scrappage incentives to boost the market.

It was the lowest January total since 1974, confirming manufacturers’ worst fears about the state of the British car market and a weak volume outlook.

The SMMT said that the UK market this year is now expected to drop by around a fifth to 1.72m units. This would be some 410,000 units off the 2008 total and almost 685,000 units down on 2007.

The SMMT said that manufacturers continue to offer finance and deals, but are seeking further government support to kick-start demand.

“There is a clear need to stimulate demand for new vehicles in the UK market. A number of EU member states have launched scrappage incentive schemes, which have the benefit of boosting consumer confidence and delivering significant environmental improvements,” said Paul Everitt, SMMT chief executive.

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“The UK motor industry is urging UK government to introduce a similar scheme and help sustain jobs and businesses throughout the sector.”

The retailers’ association, the RMIF, added to calls for the introduction of a self-financing scrappage scheme and said that it will shortly be presenting a paper to government that puts the case for such a scheme.

“Lord Mandelson’s support measures for the car industry, announced on 27 January, were ‘too little, too late’ to help revive new car sales as we enter 2009,” said RMIF Director Sue Robinson.

“Despite reports to the contrary, consumer credit is still available to those who want to replace their vehicle. There has been a vast improvement in used car sales in the last month, as consumers feeling the pinch look for great value for money on used vehicles,” said Robinson.

“This proves that there is still desire for a new car, and a budding confidence that must be developed.

“Consumers are looking to the used market for value-for-money, but in many cases new cars can offer equal value equal to used vehicles, when the savings provided through warranties are taken into account,” Robinson said.

The SMMT said that all market segments showed falling volumes in January, except the mini segment – which was up 40.8%. Supermini demand slowed less steeply than in other segments to post a market share up almost five percentage points to 35.6%.

The new Ford Fiesta was the top selling model for a third successive month in January and market leader Ford’s market share was up over 2 percentage points on last year to 18.7%.