Car output in Britain up 37 per cent in August

More than 20,000 more cars rolled out of British factories in August than in the same month of 2009, the latest figures showed yesterday.

As further evidence of the rebound in the manufacturing sector, monthly figures from the Society of Motor Manufacturers and Traders (SMMT) showed car output up by 37.3 per cent to a total of 77,900 vehicles last month. Commercial vehicle output also rose by 22 per cent, and engine production was up by more than 15 per cent.

But the strong performance still does not take car production back to pre-recession levels, the SMMT warned.

With more than three-quarters of all UK-built vehicles exported, the motor industry is a key beneficiary of this year’s economic recovery. Both car and commercial vehicle production are up 41 per cent over the year to date, and engine production is nearly 28 per cent stronger, thanks to rising global demand.

“Production is doing better than anticipated, helped by premium brands selling well in China, India and, to a lesser extent, the US,” Paul Everitt, the chief executive of the SMMT, said. “Even the Western European market is still doing okay, although there are concerns about next year, when fiscal consolidation really starts to bite.”

The motor industry was hit hard by recession, laying off thousands of workers and putting swaths of those that remained on shortened hours in response to a slump in demand that, at the worst point, wiped nearly 60 per cent off monthly production and more than a third off monthly sales.

According to current forecasts, vehicle production will rebound to 1.38 million this year, up by 26 per cent on 2009. But car sales face a patchier recovery.

Although production has rebounded strongly this year, car sales have dipped again in recent months following the withdrawal of the scrappage incentive scheme, which ran from May 2009 until March this year. The scheme is widely credited with boosting sales, but it had only a limited impact on British factories because most of the cars bought through the scheme were Korean. According to current forecasts, Britons are expected to buy 2.02 million cars this year, just 1.2 per cent more than last year.

The SMMT this week called for transfers within companies to be excluded from the Government’s planned cap on immigration. The move to put a fixed cap on immigration belies claims by George Osborne, the Chancellor of the Exchequer, that Britain is “open for business”, Mr Everitt said.

“Highly skilled employees transferred to work within the UK automotive industry are essential to maintaining and improving our global productivity and competitiveness,” he said. “Industry is concerned that the inclusion of intra-company transfers could impact on the attractiveness of the UK as a location for inward investment and undermine the UK’s role in an increasingly global economy.”