The number of new cars produced in the UK dropped by more than 50% in March compared to a year earlier, according to figures released by the Society of Motor Manufacturers and Traders (SMMT).

However, the 51% fall is an improvement on the record drop of 59% that occurred in February.

The SMMT have welcomed the government's recent announcement in the Budget that motorists trading in old cars for new ones will receive £2,000.

The scheme, which runs until March 2010, provides motorists buying new cars with a £2,000 discount - with this money provided equally by the government and the carmaker - if they trade in cars over 10 years old.

"The figures show that urgent action is necessary to kick-start demand in the motor industry and the introduction of a UK scrappage incentive scheme is an important first step," said the SMMT.