Scrappage scheme eases car industry woe

Car production fell again last month but the rate of decline was considerably slowed by the Government's "cash for bangers" car-scrappage scheme.

A total of 107,635 cars were made in the UK in July 2009 - a 17.9 per cent fall on the July 2008 figure, the Society of Motor Manufacturers and Traders (SMMT) said.

This was by far the smallest monthly decline this year and will be a welcome boost to the car industry.

However, commercial vehicle (CV) production fell 59.8 per cent last month.

Car production for the year so far is 45.8 per cent down on the January-July 2008 total, reflecting the manufacturing cutbacks by car companies earlier this year.

CV production is down 63.8 per cent for the year so far.

The more-encouraging production figures follow the heartening new-car sale statistics for July 2009 which showed the first monthly increase - of 2.4 per cent - since April 2008.

SMMT chief executive Paul Everitt said today: "The slowdown in the rate of decline of UK car production reflects the impact of the scrappage incentive schemes in place across Europe.

"The UK motor industry is starting to stabilise but remains fragile. Industry needs the Government to deliver support through the automotive assistance programme and encourage banks to provide access to much needed finance and credit."

He went on: "The CV market is suffering from depressed demand across Europe. This continues to affect the level of CV production.

"Furthermore, high stock levels mean that vehicle production may not recover as fast as the market."