ONE of the country's major dealerships is reporting that 50 per cent of loan applicants for new car purchases are being turned down and the figure is even higher for young drivers wishing to buy second-hand models.

Industry sources say that those getting approval appear to be limited to mortgage holders or those who have a good history of loan repayments, while many are given no reason for refusal.

The result is the collapse of sales this year, although the motor industry is doing its bit with thousands of euros knocked off family-sized cars and huge reductions on bigger models.

As an example, the new Mercedes Benz E-Class is almost €20,000 cheaper than the outgoing model because of cleaner engines and resulting lower tax.

With sales down 62 per cent to the end of June on the same period last year and only 10,000 new cars sales expected for the remaining five months, this will be the worst year since 1987 with about 57,000 new registrations in total expected by the end of the year. Already 25 dealerships have gone out of business and there will be further casualties before the year ends.

Ford Chairman and Managing Director, Eddie Murphy, says that there have ben 8,000 job losses in the industry since 2008 and predicts there will be more as 57,000 new car sales cannot support the current 45,000 jobs.

Society of the Irish Motor Industry boss, Alan Nolan, says that the financial institutions are "window dressing" when they announce that funds are available for car sales yet sizeable numbers of young drivers with no track record of repayments are being rejected.

He points out that the government were big losers in the decline of the motor industry. In 2007 revenue collected €2bn when sales were running at 187,000 but this was down to €1.5bn last year as sales fell to 152,000, and this figure would fall further to €0.5bn this year as a drop to 60,000 sales loomed.

A sign of the times is that small car sales are up from 18 per cent last year to over 30 per cent for the first four months of this year. Young motorists are being squeezed out as high risk by the financial institutions and older buyers are now downsizing to smaller models which are now accounting for more and more of the market. Big car sales and fleet sales have taken the biggest hit in the credit squeeze.

New car sales for the first six months amounted to just 46,854. Top sellers in the January-to-June period were Ford with 14.5 per cent of the market (6,808), Toyota had 13.8 per cent (6,482), Volkswagen took 9.7 per cent (4,529), Nissan had 8.6 per cent (4,044) and Opel held 6.7 per cent (3,162).

The Ford Focus model continues to be the best seller for Ford and has been the top-selling car for seven years on the Irish market. The new Fiesta is also proving to be a big success but sales of the new Ka are running at a much slower pace.

Sales of the Focus have been helped with the arrival of the 1.6L diesel 90 bhp which slots into A band (€104 road tax) and low VRT rating which means it can retail at €20,700 ex-works.