AUTOMOTIVE: Record dip for car production

In February, the number of new cars produced in the UK fell by a record 59 per cent year-on-year, as the woes in the automotive sector went from bad to worse.

According to the Society of Motor Manufacturers and Traders (SMMT), only 59,777 cars were produced in February, with the large fall ‘a direct result of weak demand’, in the words of SMMT CEO Paul Everitt.

This lacklustre production figure represented the largest drop in a single month since SMMT records began in 1970, and was the fifth straight month of decline. Car firms, both in the UK and around the globe, have been cutting jobs and production as they seek to respond to the effect of the recession on car sales, while also lobbying the government for help for their finance arms, which provide the loans that fuel car purchases.

In the latest negative news to hit the sector, the SMMT cancelled the British International Motor Show for 2010, as the sector continued to constrain spending, while Japanese manufacturer Toyota said UK factory staff would have their pay and working hours pared by ten per cent.

Amid London’s quoted players, FTSE 250 car distributor and retailer Inchcape confirmed plans to raise £232 million via a discounted rights issue to reduce debt, as it reported a 55 per cent drop in 2008 profits and warned that it will not pay a dividend this year. ‘Right-sizing’ its business and keen to reduce its leverage, shares in the company have dropped from a 52-week peak of 451p to a depressed 67.75p.