Figures just released by the SIMI (Society of the Irish Motor Industry) show a decline of 18pc in new car sales in May. For the year, sales are down by 8.7pc.

The latest Retail Sales figures issued by the CSO show an annual reduction of 2.7pc in the volume of retail sales in April, and the registration statistics for May indicate that there is no sign of this depressed sentiment abating.

"Throughout the wider economy, five companies closed every day last month, while in our own sector we have seen long established dealerships being forced to close recently due to a lack of business activity," an SIMI spokeswoman said.

"With consumer sentiment falling month on month and precautionary saving increasing, the outlook for the next six months is very worrying, despite the real value and reduction in new car prices in recent years," she added.

The SIMI predicts 75,000 new car sales this year.

This compares to a market of nearly 90,000 last year and 151,000 in 2008.

"A 'normal' year for the Motor Industry is in the region of 130,000 new cars so this 55,000 shortfall this year is not sustainable for the industry in the medium term. This is not good news here for the Exchequer either as this reduction impacts Government Revenues by as much as E385m each year,"

the spokeswoman said.