Inchcape, the multinational auto dealer, is in talks with its bankers over a share issue to bolster the group's finances as it copes with a worldwide collapse in sales of new cars.

The company gave warning before Christmas of an unprecedented decline in its markets, which include Australia, Belgium, Russia, Singapore and China as well as the UK.

Inchcape said this morning that it was looking at a range of options to boost its capital, including a rights issue of new shares.

Inchcape sells Volkswagen, Audi and Mercedes-Benz cars as well as BMW and Toyota.

The Japanese manufacturer owns 5 per cent of the share capital of Inchcape and is therefore likely to play a part in any cash call on shareholders.

At the end of December, the company had net borrowings of £540 million and £1 billion in available bank facilities

Inchcape said last month that it expected sales of new cars to decline more rapidly than previously estimated.

The Russian market, an important business for Inchcape, has been badly affected by the financial market downturn and the motor dealer gave warning that it expected a decline in Russian sales that will be affected by an increase in car import duties and the likelihood that manufacturers will begin to price their vehicles in US dollars.

A switch to dollar pricing would severely affect affordability because of the continuing weakness of the rouble.

In Australia, the company has been affected by a decision by GMAC, the consumer car finance firm, to cease writing new lending business.

In Britain, unions representing workers in the motor manufacturing sector will call for more help for the car industry at a government jobs summit being held today.

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