The SMMT and RMIF have sent a joint letter to the Alistair Darling and Lord Peter Mandelson warning of the effect of the economic crisis on the motor industry.
The trade bodies have suggested a number of initatives to the chancellor and business secretary, which could stimulate the UK car market and safeguard thousands of jobs.
Up to 20,000 redundancies are expected to be made in motor retail because of the market downturn.
Numerous dealers have already closed outlets or gone into receivership since the summer.
Support measures proposed are:
· Allowing manufacturers’ finance companies access to the funding available to banks through the special liquidity arrangements. This would allow them to support customers and their franchise networks.
· Scrapping plans for increased VED and new first year rate. This would provide a strong signal to buyers and help to improve residual values.
· Increased capital allowances for fleet buyers, particularly for buyers of commercial vehicles, to stimulate immediate demand.
· Shelve plans for reform of business car capital allowances, as overall impact and timing is unhelpful.
· Remove expensive car restrictions under capital allowances to help demand for UK higher end manufacturers.
And, manufacturing support to include:
· National arrangements to allow manufacturers and suppliers access to loan facilities, including potential government guarantees, to maintain liquidity and investment.
· Help to speed up the allocation of existing funding to support training, R&D projects and energy efficiency measures. This would help upskill employees, accelerate innovation and provide an immediate stimulus for green collar jobs.
Paul Everitt, SMMT chief executive, said the dramatic falls in demand for new vehicles in the UK, Europe and around the world, combined with the limited availability of funding and liquidity, now puts at risk valuable industrial capability.
"Urgent action is required to boost demand for new vehicles and ease pressure on UK automotive suppliers,” he added.
Paul Williams, RMIF chairman said: “These measures and others, jointly presented by the two industry trade associations, would go some way to helping the revival of consumer confidence in our sector.
"We urge the chancellor to undertake these measures, and to discuss further action with us if necessary.”