Britain's carmakers and traders are appealing to the Government to support the industry through the financial crisis with tax breaks and easier access to funding.

The Society of Motor Manufacturers and Traders (SMMT), and the Retail Motor Industry Federation (RMIF), organisations which represent and promote the interests of the industry, have written a joint letter to Alistair Darling, the Chancellor, and Lord Mandelson, the Business Secretary, calling for specific measures to aid the sector, which has been hit by falling demand and increasingly limited access to funding.

Last month, car sales in the UK fell 23 per cent to their lowest level since 1991. Ford, Nissan and Honda have already announced cuts to production in their UK operations.

Paul Everitt, chief executive of the SMMT, said the industry was not seeking a loan or a bailout.

"The key part of what we are looking for is access to finance," he told BBC Radio 4's Today programme this morning.

"We are facing quite unprecedented circumstances which have their roots very firmly in the credit crunch, which has been sweeping around the world.

"What that has meant is that not only have we seen very dramatic falls in demand in the UK, in Europe and indeed across the world, but also no opportunity forr our dealerships, our distribution systems, and vehicle manufacturers themselves or their supply chains, to access finance in the way they would normally be able to do during these difficult periods."

The letter calls for finance companies working for manufacturers to be granted access to funding which the Government has made available to banks through special liquidity arrangements.

It also says plans to increase vehicle excise duty and the new rate for the first year of owning a car, announced in this year's Budget, should be scrapped to encourage buyers.

The concerted action from UK industry groups today comes amid calls in America to allow carmakers access to the $700 billion government bailout fund. General Motors, Ford and Chrysler, quintessential American marques, have all warned of the potentially debilitating challenges the industry faces. Henry Paulson, the US Treasury Secretary, and President Bush have so far rejected their pleas. Later today, the House Financial Services Committee will consider the situation.

It is thought that the European Union could next week put forward ways of helping the car industry, but any measures would have to comply with tough rules against state aid.

Mr Everitt stressed that the problems were not with companies themselves, but their inability to access cash.

"The bottom line is the markets don't work, because we have a strong business model and strong businesses. What we don't have is access to finance that in any other circumstances we would have."

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