UK car production rises by more than a quarter

THE UK car industry – and its West Midland supply chain – has been buoyed by latest figures which show the industry grew by more than 27% last year.

The Society of Motor Manufacturers and Traders said the UK car industry produced 1.27m vehicles last year, with December proving one of the most productive months – up more than 10% on the same period in 2009.

Oddly, the figures for last month were not reflected in sales as customers stayed away from the garages, mainly due to the bad weather.

However, the society said that overall the figures were good news for the industry.

The recovery was not confined to the car industry as commercial vehicle production – which takes in firms such as Coventry-based black cab manufacturer London Taxi International -grew by almost 36%, with 123,019 units. The December figure was again up on 2009, this time by 19.4%.

As a consequence of the growth, UK engine output also rose – up 16.2% for the year at 2.39 million units. However, December saw a slight blip as production slipped 1.4% compared with the same month in 2009.

Paul Everitt, chief executive of the SMMT, said: “UK vehicle production is leading the manufacturing recovery with output in 2010 up 27.8%. UK manufacturers exported more than a million vehicles last year underlining the competitiveness and desirability of the current model line-up.”

However, production levels have yet to return to pre-recession levels. Total production, which includes both car and commercial vehicles, was 1.39 million, which compares with 1.75 million vehicles in 2007 and 1.65 million in 2008.

The number of engines produced was also highlighted by the SMMT as an important growth factor.

Mr Everitt said: “Engine production in 2010 grew robustly with 2.39 million units manufactured and a strong export performance.

“This performance continues to underline the significant role played by the UK in global production. We expect further growth across automotive manufacturing this year as industry continues to invest in new models and a variety of low carbon technologies.”

One of the most significant engine plants in the UK is the BMW facility in Hams Hall, which makes engines for the group’s 3-Series.

The car figures went some way towards offsetting news from the CBI that UK factory orders fell in January.

The business organisation’s quarterly industrial trends survey showed a drop in its total order book balance to -16% this month compared with -3% in December.

Despite the drop, the CBI said maintained its stance that the recovery in the manufacturing sector was firmly in place.

However, it has warned that inflationary pressure from rising fuel and energy costs, the VAT increase and public sector cutbacks could impact on performance as 2011 progressed.

David Martin, manufacturing sector expert at PwC in the Midlands, said: “It is great to find that a third of manufacturers have reported an increase in output over the past quarter, mainly due to growing export demand. The sector continues to do well and is driving the UK economic recovery.

“The pressures of cost inflation are a growing factor and it is becoming increasingly likely that the current favourable exchange rates could alter in the not too distant future, particularly if interest rates begin to rise.

“However, Midlands manufacturers still have a window of opportunity to strengthen their foothold in export markets (while rates remain favourable) and the highly innovative nature of most domestic product means that these trading links are likely to hold firm even if the value of sterling rises.”