Manufacturers’ body EEF (Engineering Employers Federation) has called for the UK government to continue its car scrappage scheme.
The EEF said in a letter to Chancellor Alistair Darling that the scheme had helped to save manufacturing jobs.
The scrappage scheme is currently due to end in February, or when the £300m the government has allocated towards the scheme runs out; whichever happens first.
A total of more than 8bn euros ($11.4bn; £7bn) have been spent by the UK, German and US governments on car scrappage.
Carmakers have been calling for governments to extend the schemes.
There are concerns that car sales will now fall sharply without incentives as the various scrappage programmes come to an end.
“It is far from certain that consumer demand for motor vehicles can remain at these levels without government and industry providing incentives to replace older vehicles,” said EEF head Giles Toppin in the letter.
“There are, therefore, clear risks that the recent upward trend will go into reverse once the current scrappage scheme expires.”
The letter was also signed by heads of other groups including UK Steel, the Manufacturing Technologies Association and British Plastics Federation.
The US version spent its $3bn allocation in a matter of weeks and the 5bn-euro German scheme, the largest of any government, ran out early this month. It encouraged almost two million motorists to scrap their old cars and exchange them for new ones.