Car manufacturing in Britain is declining faster than any other industrial sector.

There were 44.9 per cent fewer cars built in the three months to February than the same period a year earlier.

Total manufacturing output in the same period was 6.5 per cent lower than the previous three months. Industrial production is now falling at its fastest rate since 1968.

This come a day after the Society of Motor Manufacturers and Traders showed new car sales for March slumped 30.5 per cent year on year.

It is likely to increase calls for the government to introduce a ‘scrappage’ scheme to pay drivers to sell their old cars and buy new ones.

A similar scheme in Germany has helped boost new car sales by 40 per cent.

Head of manufacturing at BDO Stoy Hayward Tom Lawton said: “With output decreasing at its lowest rate of decline in six months, this could suggest that the sector is beginning to show some signs of recovery.

“Over the past few months we have heard the Government saying how it will do everything in its power to protect the manufacturing sector.

“But we now urge the Chancellor to set the wheels in motion by using this month’s Budget as the catalyst for developing appropriate aid packages to help restore the industry, and therefore consumer and business confidence.”

Centre for Economics and Business Research economist Benjamin Williamson expects Britain’s manufacturing decline to get even worse.

He said: "Our latest forecasts for the UK economy show both total production and manufacturing sector output are in for double-digit contractions in 2009. Therefore they still have some way left to fall."

Should the government pay drivers to sell their old cars?