Global car markets could take five years or more to return to pre-recession levels, industry experts said yesterday, as figures showed that British car sales for March fell 30.5 per cent compared with the same month last year.

The drop in sales for such a critical month prompted fresh calls for government incentives to boost the domestic car market, following the example of several other governments.

March is normally the biggest-selling month for the industry because of changes in registration plates. Last month should have also been flattered because Easter fell in March last year, meaning that there were three more business days this year.

The Society of Motor Manufacturers and Traders (SMMT) wants a scrappage programme, which would reward drivers of old cars for scrapping them and buying new vehicles, to be introduced in the Budget.

Paul Everitt, the SMMT's chief executive, said: “The fall in the market shows that Government needs to do more to boost confidence.”

Garel Rhys, an automotive expert at Cardiff University, said that if the market continued to slide at its present rate, sales could fall to only 1.4 million vehicles by the end of the year. That would be a 41 per cent drop on the level seen two years ago.

Professor Rhys said that he did not expect recovery in the UK and world markets to start properly until 2011 and that full recovery would not come until 2013, at the earliest. He also gave warning that the speed of the recovery in the car industry would depend on the pace of economic recovery. In the United States it took the industry 20 years to recover from the Great Depression.

Howard Wheeldon, a strategist with BGC Partners, said: “It's highly unlikely we will see the levels of 2006-07 reached any time in the next five years. It depends a bit on what governments do with incentives, although that will be an artificial impact. But for the near-term, people will be mostly concerned with whether they have a job.”

However, the gloom over market prospects came as some positive signs of restructuring in the industry began to emerge. Foremost among them was the news that Jaguar Land Rover and Nissan's UK operations could be granted hundreds of millions of pounds in loans from the European Investment Bank (EIB) today in the first tranche of money from the Government's £2.3 billion rescue package for the car industry.

The Government is directly providing £1.3 billion and the remainder is coming from the EIB, although the European money will need underwriting by Britain. Jaguar Land Rover has applied for €300 million (£270 million) from the EIB for developing green technology; Nissan has asked for €400 million for its British and Spanish operations.

Ford continued to underline the difference in its performance in the downturn from that of its big American rivals by reducing its automotive debt by $9.9 billion (£6.7 billion), or 38 per cent.

General Motors, Ford's main rival, appeared to be making progress with its efforts to partly spin off its European division and cut loose Saab, its Swedish marque. Workers' representatives on the supervisory board at Opel, GM's German brand and its biggest European division, said that there had been early interest from Middle East investors. The administrator to Saab, which is under Swedish bankruptcy protection, said that about 20 potential buyers had expressed an interest.

The Prime Minister will attend a meeting of Britain's biggest banks today to discuss why more capital is not being lent to businesses. It is understood that Mr Brown will also talk to the banks about the reform of the financial system. On Monday, the Prime Minister, Alistair Darling and Lord Turner of Ecchinswell, head of the Financial Services Authority, discussed the outcome of the G20 meeting.

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