Car sales had another blow in October, as new car registrations fell 23% to 128,352 units compared to the same month last year.
Year-to-date volume is down 8.8% to 1,922,771 units.
Diesel market share rose to a record high of 45.6% in October.
As a result of the downturn, 2008’s forecast has been revised to 2.15 million vehicles.
Call for action
"October has proved another difficult month for the UK motor industry and action is needed to help restore consumer confidence and encourage buyers back to the showrooms," said Paul Everitt, SMMT chief executive.
"Cuts in interest rates that are swiftly passed on to consumers, scrapping planned increases in VED and maintaining public expenditure on new vehicles are essential parts of the package required by industry.”
He added: “There is also a clear role for European action to support continued investment in new, lower carbon vehicle technologies."
Prevent job cuts
His call for interest rate cuts was echoed by Sue Robinson, director of the National Franchised Dealers Association at the RMIF.
She said the next few months could be difficult if Government takes no action to help consumers and businesses.
Robinson added: "Businesses desperately need to see that the Government is supporting them. This will help shore up businesses, and prevent further job losses."