Continental sales slump hits UK car production: Industry still expects better year overall

BRITISH car production fell in July for the first time since February as manufacturers responded to falling Continental sales. The industry is still predicting, however, that more cars will be built this year than last.

The Society of Motor Manufacturers and Traders said output last month was 115,648, 2.4 per cent lower than in July 1992. The drop was due entirely to the collapse in European sales: registrations in Germany in the first half of the year were down 19.9 per cent and in France by 18 per cent.

As UK sales have picked up, rising by 9 per cent in the year to date, the proportion of cars made for export has tumbled. Last year it was 46 per cent; in July it was 29 per cent.

Production by all the established volume producers has been cut back. Vauxhall's output in the first half of the year was down 11 per cent at 162,000. Ford's production was 22 per cent lower at about 250,000. Peugeot was down 12 per cent at 43,000 and Rover's output was 3 per cent off at 189,000.

A Rover spokesman said its fall was entirely due to a reduction in stock levels, and that sales increased by 10.5 per cent in the same period. Rover was the only European manufacturer to increase sales on the Continent in the first half of the year.

Even though Peugeot and Vauxhall have announced further cuts this month, the SMMT has not modified its forecast that production for 1993 will be 8.5 per cent up on last year. It is 7 per cent ahead in the year to date, and will be boosted both by recovering UK demand and by the build-up in production from Japanese factories.

Nissan is planning to make 270,000 cars at its Sunderland plant this year, compared with 179,000 in 1992, although a spokeswoman admitted it would probably not achieve this target. Toyota, which started production in Derbyshire last December, will make 35,000 cars this year while Honda's Swindon factory, which opened last October, will make about 30,000.

All three Japanese factories plan to continue building up production.

Meanwhile production of commercial vehicles continues to plunge. In July 12,156 were manufactured, 49.7 per cent down on the same period last year. Export production, at 3,594, was 66.5 per cent down.

Geoffrey Pelling, the SMMT's economist, said there were signs that demand for heavy vehicles in the UK was recovering, following a disastrous slump during the recession, while light vehicles, used by small businesses in the service sector, were still in trouble.