UK car production rises 65 per cent – but from low base

Car production shot up by a massive 64.8 per cent in January, but only compared with the doldrums of the previous year, according to the latest figures from the Society of Motor Manufacturers and Traders (SMMT).

Although the 101,109 vehicles that rolled off Britain's production lines last month were a heartening improvement on the 61,404 cars made in January 2009, it was still a far cry from the 148,644 produced in January 2008 before recession wreaked havoc in the global automotive industry. Although February 2009 was the nadir for UK vehicle-makers, by January factories were already subject to extended Christmas shutdowns and massive capacity reductions.

Production has been boosted over the past nine months by a string of "scrappage" incentives across Europe, the majority of which have now come to an end. But the fact that commercial vehicle production showed a 9.6 per cent rise in January, the second consecutive month, suggests gradual economic recovery may take over from the boost provided by subsidy schemes.

"We are expecting a modest recovery in 2010 output as economic growth, a competitive exchange rate and the introduction of innovative new models to UK plants help to lift manufacturing levels above those seen in 2009," the SMMT's chief executive, Paul Everitt, said.

The car industry is not the only manufacturing segment showing tentative signs of optimism. Overall UK manufacturing output is also expected to pick up slightly over the next three months, with companies responding to the CBI's monthly Industrial Trends survey recording the most upbeat outlook for nearly two years. Of the 548 respondents, only 18 per cent are anticipating a fall in output in the coming quarter, while a quarter are expecting a rise.

Export order books are also continuing to improve, thanks to improving global demand and the weak pound. But total order books are still down, with 46 per cent of respondents reporting "below-normal" levels.