Not all varieties of car have been hit by the downturn
New UK car registrations last month hit the lowest level for any August since 1966, industry figures show.
The Society of Motor Manufacturers and Traders (SMMT) said that new car registrations were down 18.6% to 63,225 compared with the same month in 2007.
It said that declining consumer confidence was hitting sales across all major European markets.
It has called on the UK government to take "sustained action" to boost the economy and restore confidence.
The SMMT said new car registrations were down 3.8% in the year so far, compared with last year.
"Industry is encouraged by the growing interest in lower-carbon cars, but is concerned by the reluctance of consumers to commit to major purchases," said chief executive Paul Everitt.
As well as weaker consumer confidence, the high price of petrol has also been deterring buyers.
The group did say that falling oil prices could help boost sales.
Although the absolute number of diesel vehicles declined for a second successive month, their market share increased, with the VW Golf the best selling diesel model in August.
"As consumers tighten their belts and move to more efficient models, diesels remain an effective choice," a group spokesman said.
The overall top sellers in August were two smaller cars, the Vauxhall Corsa and the Ford Focus.