Decline in UK car production slows

20 June 2009

The pace of decline in the UK's car production slowed to its lowest in March with the declineat 43.0 per cent, the UK industry body, The Society of Motor Manufacturers (SMMT) said.

Although passenger car production registered a 43 per cent drop with only 67,754 cars produced during the month, commercial vehicle production fared worse with production declining 73.5 per cent compared to 65.4 per cent in May 2008.

With only 4,692 commercial vehicle manufactured in May, production of commercial vehicles was severely affected by low business confidence and economic uncertainty as companies in the UK are still holding back on new purchases as access to finance is still tight and the government has still not been able to convince banks to lend in order to boost domestic sales.

The SMMT said, ''Outlook remains difficult, but positive signs evident as manufacturers restart production with scrappage schemes lifting orders.''

The UK government said last week that the scrappage scheme was a hit as car manufacturers have received more than 60,000 orders under it since it was first announced in the Budget in April. (See: UK car scrappage scheme boosts auto industry  /  UK government's car scrappage scheme a hit)

''Prompt action by manufacturers to realign supply with demand has been painful, but was necessary. There is now a direct link between demand in the marketplace and production volumes,'' said Paul Everitt, SMMT chief executive.