New car sales slumped to their lowest level for more than four decades in August in the most dramatic sign yet that the UK is driving headlong into recession.

The Society of Motor Manufacturers and Traders revealed new car registrations last month had hit the skids, down nearly 20 per cent to 63,225 compared with the same month in 2007.

Britain’s biggest industry – with massive manufacturing plans across the Midlands – has warned of more cuts in production as consumers shunned car showrooms.

The SMMT blamed the drop on declining consumer confidence and called on the Government to take sustained action to kick-start the economy.

New car registrations are down 3.8 per cent so far this year, compared to 12 months ago, but manufacturers believe this will slide to 10 per cent – or 85,000 vehicles – by the end of 2008.

Hardest hit have been luxury marques, many made in Britain. Aston Martin has been hit by a 67 per cent drop with just 19 cars sold, with West Midlands-based Land Rover seeing a 58 per cent drop to 422 cars down 41 per cent to 422 vehicles.

SMMT chief executive Paul Everitt said: “August is one of the quietest months for the new car market, but this year it was the lowest since 1966.”

Back then, when total sales came in at 53,000, the top-sellers included the Ford Cortina and Austin 1100, while today’s leaders are the Vaushall Corsa and Ford Focus.

Based on the gloomy economic forecasts, the society has revised its forecasts for the new car market, with a prediction of a total of 2.26 million sales this year, slipping to 2.16m in 2009.

“The market continues to weaken as consumers hold off new car purchases in the face of deepening concerns over the state of the economy,” the SMMT said.

Mr Everitt said the industry was encouraged by the growing interest in lower-carbon cars, but was worried by the reluctance of consumers to commit to major purchases.