Surge in exports lifts British car output

The British motor industry exported more cars than it sold at home last year for the first time in its history. However, the industry's trade balance remained in the red as imported cars took 62 per cent of the 2,025,450 new cars sold in 1996.

According to figures released yesterday by the Society of Motor Manufacturers and Traders, 54 per cent of the 1.65 million cars built in Britain last year were exported, mainly to continental Europe, compared with 48 per cent in 1995 when production reached 1.53 million. Production is forecast to exceed 1.7 million this year.

The surge in exports, fuelled by increasing production at the three Japanese transplant factories in Britain, helped lift total car output to its highest level since 1973.

At the same time, official SMMT figures showed that the new car market broke back through the 2 million mark for the first time since 1990. The total of 2.025 million was 4 per cent up on 1995 and the third-highest on record.

Ernie Thompson, the SMMT's chief executive, forecast that sales would rise by a further 25,000-50,000 this year despite possible jitters among private buyers in the run-up to the general election. By 2000 the SMMT is forecasting sales of 2.2 million and annual production of 2 million, enabling the industry to wipe out its long-standing trade deficit.

In 1995 the industry was in the red to the tune of about pounds 5bn. The rise in output will be partly driven by increased production from Toyota, Nissan and Honda. Toyota, for instance, will start production of a second mid-sized Corolla model next year at its Burmaston plant in Derbyshire.

However, British manufacturers are also gearing up to raise production, with Jaguar launching the X200 model from Coventry and Rover preparing to start manufacture of a new small Land Rover, code-named the CB40, at Solihull.

The sharp rise in imports from 59 per cent of sales in 1995 to 62 per cent was driven by strong sales to private buyers of models such as the Fiat Bravo and Punto, the Megane and Clio from Renault and the Volkswagen Polo.

The three European manufacturers all increased their market share last year at the expense of UK-based manufacturers. Ford's market share slipped below 20 per cent for the first time since 1971 while Vauxhall's share fell from 15 to 14 per cent and Rover's from 12 to 11 per cent.

The SMMT expects the importers' share of the market to remain above 60 per cent this year. However, it said that export production was increasing at twice the rate that imports were rising, meaning an overall reduction in the trade deficit.

Last year Britain shipped about 890,000 cars overseas and imported 1.26 million cars. This year imports are expected to rise slightly to 1.28 million while exports are forecast to remain around the same level.

Separately, the SMMT said it would press the next government, Conservative or Labour, to introduce financial incentives for car owners to scrap old, environmentally unfriendly models and trade them in for new cars.

Comment, page 15

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