Sector: Automotive

A key bellwether for the state of the economy, UK car production revved 64.8 per cent higher in January, compared with the same month in a tortuous 2009 for the industry.

This uptick represents the largest year-on-year increase in monthly production since May 1976, according to the Society of Motor Manufacturers and Traders (SMMT), although admittedly the rise is from a very low base, with the industry recently battered by recession. A total of 101,190 cars were made in January – an increase from 85,316 in December – and, while car production levels slowed to a 25-year low in 2009 as the recession bit, the SMMT expects ‘modest growth’ in 2010.

Other key statistics announced included a 9.6 per cent rise in commercial vehicle production in January, a second consecutive monthly hike, to 9,156 units and a 26 per cent surge in UK engine production to 193,265.

Though the latest data is encouraging, key industry commentators continue to urge caution. After some surprisingly positive production figures from the SMMT in December, KPMG renewed its warning to UK car-makers to be cautious about 2010 manufacturing prospects. The accountancy firm pointed out that, although car production volumes are expected to increase globally this year, it is unlikely to be the case in Western Europe and the US as car scrappage schemes come to an end.

‘As the production output improves,’ said KPMG, ‘it should be remembered that more businesses fail coming out of a recession than going in, so the automotive industry is still on very thin ice.’