New car registrations fell 30.9% in January to 112,087 units, according to the latest SMMT figures.

While the industry hopes the recent announcement by the government to free up financing for vehicle purchases will boost sales, it is still predicted that the new car market will decline by a fifth in 2009 to 1.72 million units.

This would be some 410,000 units off the 2008 total and almost 685,000 units down on 2007.

Fleet sales during January fell by 35.8% to 58,547 cars, compared to 90,998 in January 2008.

Business car registrations, which are categorised as fleets of less than 25 cars, fell at a slightly lower level of 33% during last month, ending at 7,021 cars registered compared to 10,523 in January 2008.

New van sales were also down significantly during the first month of the year – falling nearly 50% - and 18% for the rolling year.

“The UK commercial vehicle business is in for a very tough year even if government policy aid and lending guarantees arrive,” said Paul Everitt, SMMT chief executive.

To boost sales, especially in the private buyer market, the SMMT is calling for the government to mimic moves in other European countries.

“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 Mr Everitt.

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