The number of new cars made in the UK declined 30% in June compared to the same month last year, according to figures released by the Society of Motor Manufacturers and Traders (SMMT).

However, the decline is the smallest of the year so far, and despite the recession the pace of output decline is also slowing.

The government's car scrappage scheme - which gives car buyers a £2,000 discount on a new car if they scrap one that is at least 10 years old - is beginning to stimulate trade.

"As production volumes and registrations begin to stabilise, government must help to sustain consumer confidence and encourage banks to deliver the credit industry needs," said SMMT chief executive Paul Everitt.