Decline in car output rate smallest this year

The industry is expecting difficult times ahead

UK car production fell by 6.7% in October compared with a year earlier - the smallest annual decline of the year, industry figures have shown.

There were 106,400 cars made last month, the Society of Motor Manufacturers and Traders (SMMT) said.

The continuing impact of the government's scrappage scheme and a recovery in global markets is helping to drive production, the SMMT said.

Earlier, employers' group CBI called on the government to extend the scheme.

'Difficult year'

So far this year, 801,169 cars have been produced in the UK, a fall of 38.1% on the same period last year.

The [scrappage] scheme cannot go on forever, but the government should think seriously about extending it until the general election

Richard Lambert, director general, CBI

The decline in commercial vehicle production was much more dramatic, with year-on-year figures showing a fall of 39.5%. Production for the first nine months of this year is now down 60%.

In September, the number of new cars made in the UK fell 16.1% from the same month a year earlier.

Despite the improving production figures, the SMMT predicted "another difficult year" ahead for the car industry.

It also called on the chancellor to use his Pre-Budget report "to help sustain and strengthen recovery".

More subsidies

In September, the government announced that the scrappage scheme, which it introduced in May, would continue, at a cost of £100m.

The scheme allows motorists to trade in cars more than 10-years-old in return for a £2,000 subsidy on a new model.

The extension incorporates an extra 100,000 vehicles, including vans that are eight, rather than 10-years-old.

The slowdown in the decline in production is thought to be a direct result of the initiative.

"The scheme cannot go on forever, but the government should think seriously about extending it until the general election," said Richard Lambert, director general of the CBI.

"The scheme has had a big impact - distributors in particular have had a great few months."