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The strife in the wider economy was reflected in the latest car production numbers, which show the industry is still struggling despite costly government initiatives.
Industry figures show that 199,616 cars were made in the UK in September, down 16.1% on the same month last year.
Although this fall is hefty, it is notably less than August, when production dropped 31.5%.
The September figures mean car production is falling at the slowest pace for a year, something the Society of Motor Manufacturers and Traders attributed to the popularity of the government's “cash-for-bangers” scheme, also known as scrappage.
Paul Everitt, chief executive of SMMT, said: “The rate of decline in new car production slowed to its lowest level in a year with the volume of vehicles being produced for the UK market comparatively high. Demand is clearly being underpinned by the scrappage incentive scheme and the extension to the scheme will ensure that demand continues into 2010.”
Total car production for the year to date is still down 41.2% compared with January to September last year.
The figures for commercial vehicles were less positive, with the number of vehicles made last month dipping 53% compared with September 2008.
Everitt said: “The UK economy is slowly emerging from recession, but businesses remain reluctant to commit to large capital investments and this is reflected in low demand for commercial vehicles.”
Not everyone is convinced that scrappage has been a success. Mike Steventon, head of auto at KPMG, says: About 90% of cars purchased through the scrappage scheme are imported vehicles and, accordingly, the scrappage scheme has provided little benefit to UK car assemblers and component suppliers. In particular, many UKcomponent suppliers are highly stressed and it is essential that the UKmaintains a healthy component industry to support the long term viability of car manufacturing in the UK.”
