Fresh plunge revealed in car production

Manufacturers today announced another huge monthly fall in car production.

The news came as Business Secretary Lord Mandelson said motor companies could survive if they took the right decisions.

But official figures showed the number of cars made in the UK last month fell 59 per cent compared with February 2008.

The statistics for commercial vehicle production were even worse - showing a 71.6 per cent fall on the February 2008 total.

The figures came the day after the Society of Motor Manufacturers and Traders (SMMT) - which published today's statistics - announced the 2010 British International Motor Show would be cancelled because of the recession.

The SMMT said today more than 300,000 units had been lost from total vehicle output in the past 14 months

SMMT chief executive Paul Everitt said: "The large fall in February's vehicle production is a direct result of weak demand and the need to protect the highly-skilled workforce and valuable industrial capability in the UK automotive sector.

"We have seen action to encourage longer-term investment, but still require Government support for short-time working, easier access to finance and credit and the implementation of a vehicle scrappage scheme."

The scrappage scheme under which motorists would be paid to trade in their old cars for more eco-friendly models, is a policy which has been introduced in a number of European countries.

Lord Mandelson said last month that ministers were looking at such schemes but no decision has been announced.

Speaking ahead of a visit to the Nissan car plant in Sunderland today, Lord Mandelson said: "The car manufacturers, their huge supply chain, are a cornerstone of our manufacturing sector.

"They employ very, very many people, so their survival is important, and they will survive, they will thrive in the future, as long as they make the right decisions now."

He pointed out that the Government had created an assistance package "to make sure that these vital companies do not cut back and harm their capacity, both their plant, their research and their development, as well as their very skilled workforce, in a way that would find it more difficult for them to take advantage of the upturn when it comes".

Lord Mandelson added: "So both through their access to European Investment Bank loans, which the Government here is prepared to guarantee, as well as the loans and guarantees that we are prepared to offer to the industry, domestically, we are going to make sure that where these companies are viable going concerns - and in the overwhelming majority of them that is the case - they do have a future."

AA president Edmund King said: "These plummeting car production figures show the urgent need for a boost to this vital industry.

"Car scrappage schemes in countries such as Germany are already having a positive effect on sales.

"The Government needs to decide now whether or not they will introduce a financial incentive to buy new cars because uncertainty means some potential buyers are putting off their purchasing decisions.

"In an AA/Populus poll of 17,000 drivers more than a quarter said that they would consider taking advantage of such a scheme. This would bring confidence back to the market and mean we would have safer, greener, cleaner cars on the roads.

"For the scheme to work we also need to see more credit available for consumers to take advantage of such a scheme. We are raising this issue with the Treasury and Bank of England."