Car sales during October showed their worst annual decline for seventeen years, falling by just below by a quarter in the worst set of figures seen since the last recession.

During October, cars sales fell 23 per cent to 128,352, reflecting the sharply deteriorating economy and the worst of several months of accelerating declines where sales of luxury cars, such as the Bentley, as well as people carriers have been hit particularly hard.

Sales of new cars fell 21 per cent in September, despite the introduction of new '58' number plates, and by 19 per cent in August. According to the Society of Motor Manufacturers and Traders, which releases the data, sales last fell by more than a quarter back in June 1991.

The weak figures were underlined by dismal results from the world's largest carmaker, Japan's Toyota, which said that this year's operating profit would be 63 per cent lower than expected due to an "unprecedented" sales collapse in Europe, the US as well as faltering trade in China and India.

Toyota said that operating profit for the year to March would amount to between Y600 billion, compared to the previous Y1.6 billion forecast.

In its second quarter, to September, operating profits fell 72 per cent to Y169.5 billion, while net profit sank 69 per cent to Y139.8 billion yen.

In Europe, Toyota's operating income decreased by 59.6 billion yen, to 8.7 billion yen, although it did not give out any UK specific data. Toyota has two plants in the UK, making Avensis and Auris cars at Burnaston, in Derbyshire, while the second makes engines in Deeside, North Wales.

Mitsuo Kinoshita, executive vice president, Toyota Motor, described the sales crisis as "an unprecedented situation" and blamed the financial crisis for "negatively impacting the real economy worldwide".

Toyota said it had established an "Emergency Profit Improvement Committee" to find ways of cutting costs to maintain the company's income.