The automotive industry has hit out at news that manufacturers will be forced to share the cost of the Chancellor's car scrappage plans, announced in today's Budget.

Alistair Darling was today announcing plans to follow most of his European counterparts in launching a "cash for bangers scheme", paying motorists up to £2000 when they trade in old vehicles for new in a bid to halt the slide in car sales.

Under the subsidy, Britons will be given cash when they replace a car aged more than nine years old with a new or one-year-old model. But Darling is thought to be unwilling to force taxpayers to pay for the entire scheme and is asking manufacturers to stump up half the cost.

The sector's main trade body, the Society of Motor Manufacturers and Traders, called the plan "mad", arguing that it will mean manufacturers will make a loss on the sale of some new cars.

Chief executive Paul Everitt said: "For them to agree something that's a damp squib in the market place would be a disaster for the industry and the government." SMMT also says a state subsidy of £1000 alone would not be enough to tempt many motorists.

Since most of the UK's biggest carmakers are European companies, the Treasury is concerned taxpayers will end up bailing out manufacturers from the continent. Over 80% of cars sold in the UK are imported from overseas, while most of the cars made in the UK are exported.

The sector, one of the UK's leading manufacturing industries, has been hard hit by recession, with sales off 30%.