Domestic demand drives car production higher
STRONG domestic demand saw UK car production get off to a steady start in January with output rising 1.2% on the same month last year.
Demand from the home market saw cars being dispatched to UK showrooms rise by 26.1%. However, the continuing slowdown in the euro zone had a knock-on effect for exports with the number of vehicles heading overseas falling to 79.1%, a drop of 3.1%.
Nevertheless, the Society of Motor Manufacturers and Traders is still looking to the future with confidence.
It said independent analysis suggested that UK car manufacturing could grow a third bigger by 2016 with output approaching two million vehicles each year.
Mike Baunton, SMMT Interim Chief Executive, said: “UK car manufacturing grew modestly in January, up just 1.2% on the same period in 2012. Output is typically subdued in January as manufacturers extend holiday periods to upgrade plants and re-tool for new models.
“Despite ongoing economic challenges, growing demand for UK-built products in emerging global markets coupled with major new investment is paving the way for a positive year for automotive manufacturing.”
John Leech, UK head of automotive at KPMG, said the performance showed the industry remained resilient in the face of the euro zone problems.
“This resilience is borne from the fact that the UK exports a greater share of its vehicles to high-growth emerging markets than any of its European competitors,” he said.
“A small fall in production had been anticipated in January, so this increase, albeit minor, suggests the industry is feeling confident about strong UK car sales when the new registration plate changes in March 2013.
“And of course the bigger picture is that short-term Eurozone demand weakness will not derail the medium-term prospects for the UK car industry which remain bright and I still expect total UK vehicle production to hit the two million mark in 2016.”
