Jaguar is to join a list of British carmakers to cut production as the UK motor industry struggles to deal with plummeting demand for motor vehicles from customers in Western Europe and the US.

Its Indian owners Tata will scale back output from its Castle Bromwich factory in Birmingham at the end of the month. The cut follows similar action by Land Rover in Solihull, Toyota and Bentley.

Other car manufacturers are also expected to look at cutting production as sales suffer. Premium brands such as Jaguar have been particularly badly hit amid the credit crunch.

Last month the UK car market suffered its worst August sales for 40 years and export markets are also suffering from weak demand. Sales this month, a key date in the industry’s calendar because of the new registration plate, are also believed to be very poor.

A spokeswoman for Jaguar said: “In view of the current sales environment we will be taking action to balance production with demand in the fourth quarter.”

She added the carmaker was still deciding on the scale of the action but it is thought likely it will cut at least one shift. Jaguar’s Castle Bromwich factory employs 2,600 people to make the XJ, XK and the new XF.