“The market this year and next year will be difficult – probably the most difficult year in the car market since 1991,” said Professor Garel Rhys, president of the Institute of the Motor Industry.

“Anyone under the age of 35 will not have experienced anything like this.”

Rhys argued that consumers are feeling the impact of rising domestic costs and are less likely to be considering spending money on new cars. “The economic chickens are coming home to roost – confidence amongst consumers is ebbing at a remarkable rate. Look at what's left after they've paid for their mortgages and necessities – they are being squeezed.” “The Budget will make it even more difficult to be a car owner,” he said. He said only car retailers who have invested heavily in training and successfully developed best practises would weather the economic storm.

However, Rhys said the position of vehicle production in the UK looked more encouraging with van manufacturers in particular benefitting from increased demand from the eastern European countries that had lost their domestic LCV producers. He is also encouraged by the influx of foreign investment in UK vehicle producers with Russian ownership of LDV, Tata's pending acquisition of Land Rover and Jaguar and Chinese investment in the old Rover plant. “Shanghai Automotive has big plans for Longbridge – they are talking about two shifts. They will build saloon MGs and will go for the jugular in Europe,” he said.