Paul Everitt, chief executive, said: “New car registrations fell in February in line with market expectations. It is important the chancellor uses the budget to help boost consumer confidence and avoids disruptive or disproportionate changes to vehicle and fuel taxation.”

The SMMT claimed government revenue from fuel duty had doubled to more than £25m between 1990 and 2006.

Just 69,610 cars left showrooms in February, which is the lowest volume month of the year, accounting for just 3.4 per cent of annual registrations. However, the SMMT warned volumes in the all important plate-change month of March, which takes 19 per cent of annual sales, would also be well down on last year. It forecast registrations of 425,000 this month – 25,000 behind March 2007. The weak March market is expected to contribute significantly towards a 2.5 per cent slide in total sales in 2008 to 2.34 million units.

The RMIF expressed disappointment at the government's decision last week to hold interest rates at 5.25 per cent. “The market needs encouragement which only an interest rate cut could provide,” said Sue Robinson, director of the NFDA. Sales over the first two months of the year were down 3.1 per cent to 231,707. Economic strictures and increasing concern over the environment contributed to strong growth in diesel and alternative fuel sales. An 11 per cent hike in diesel sales last month to over 31,000 saw oil burners take a near 45 per cent market share while demand for alternatively fuelled cars rocketed by 21 per cent in February.