The car industry will not show significant signs of recovery for another two years and it will be five before it is back at pre-recession levels, according to Jaguar Land Rover (JLR).

The Independent reported that JLR predicts that a 30% drop in car sales in the second half of last year will continue in 2009.

Only carmakers which cut costs, while maintaining investment in future models, will survive; no doubt why JLR has applied for a £340m research loan from the European Investment Bank.

JLR is saving millions through a recent pay freeze agreed with unions, and has cut inventory by moving from double to single shifts at all plants.

But it is vital to keep investing in new products, because only new products will persuade reluctant consumers to buy, said Phil Popham, Land Rover managing director.