New car sales fell 21.2 per cent in December signalling challenging times ahead for the motor industry.

Over the year, new car registrations fell 11.3 per cent, the worst year for the industry since the early 1990s.

High petrol prices through much of 2008 and a looming recession discouraged consumers from spending cash on new cars while the credit crisis limited availability of car loans, prompting the auto industry to cut back on production.

The Society of Motor Manufacturers and Traders (SMMT), which is lobbying the government for help, said this trend is likely to continue into 2009.

“The global economic downturn, precipitated by the crisis in the international banking and finance sector, created unprecedented challenges for the UK automotive industry in 2008,” said SMMT chief executive, Paul Everitt.

“2009 will be another difficult year for the UK automotive industry with new vehicle registrations and production significantly reduced.

“The extraordinary circumstances we currently face mean that government support will be required to take advantage of global economic growth when it returns,” Mr Everitt added.

The credit crunch and high petrol prices fuelled demand for small cars, with the mini segment recording the only growth in 2008.

Diesel cars also increased their market share, reaching an all-time high of 43.6 per cent over the month.

The Ford Fiesta was the most popular new car in December, while the Ford Focus was the best seller for a tenth successive year in 2008.