Car production figures rise, pointing to modest upturn in British economy

• Source: Xinhua
• [09:21 December 21 2009]
• Comments

Car production in Britain rose for the first time in a year during November, a leading industry body said Decmber 20.

The Society of Motor Manufacturers and Traders (SMMT) released its November production figures showing that 112,948 cars were built in Britain in November, a 15.7-percent increase on the same time a year earlier.

Paul Everitt, SMMT chief executive, said: "November saw the first increase in UK car production since September 2008, reflecting the positive impact of scrappage schemes and economic stability in a number of major European markets."

Britain is the third largest car market in the EU with 2.1 million new cars registered in 2008, a year which saw the British car market only affected toward the end by the global financial crisis. The market is 34.4 percent on figures to November, compared with the previous year.

Some nine major car makers and six commercial vehicle manufacturers produce around 1.6 million vehicles each year. The industry employs, directly or indirectly, more than 850,000 people.

In recent years the sector has accounted for almost 10 percent of annual total manufacturing turnover value, and contributes exports valued at 25 billion pounds (about $40.4 billion), which is 11 percent of total national export value.

Despite this the mass market now contains no British-owned car maker, with foreign firms such as Ford, BMW and Toyota all having large manufacturing bases in the country.

The financial crisis has hit motor manufacturers hard: the first warning signs of lower assembly activity appeared in late 2008. New car sales fell by 11.3 percent in 2008 to 2,131,795 vehicles.

Buying a car is the Britons' second biggest expenditure after buying a house, so the car market is highly vulnerable to changes in discretionary spending and falling consumer confidence has damaged demand.

In the wake of the financial crisis the government introduced a car scrappage scheme, in spring this year. It has given cash to buyers who exchange their old cars for new ones, in a bid to stimulate the market. If a buyer exchanges a car older than 10 years, he can get a 2,000-pound (about $3,232) subsidy for his new one, 1,000 pounds from the government and 1,000 pounds from the motor industry.

The government fund of 300 million pounds (about $484.8 million) is expected to run out in February next year, and Lord Mandelson, the government's business secretary, announced in the autumn that the scheme would be extended with a fresh 100 million pounds.

The scheme has been a success, and is seen as essential to the continued short-term well-being of the sector.