Car production in Britain rose for the first time in a year during November, a leading industry body said on Saturday.
The Society of Motor Manufacturers and Traders (SMMT) released its November production figures showing that 112,948 cars were built in Britain in November, a 15.7-percent increase on the same time a year earlier.
Paul Everitt, SMMT chief executive, said: "November saw the first increase in UK car
production since September 2008, reflecting the positive impact of scrappage schemes and economic stability in a number of major European markets."
Britain is the third largest car market in the EU with 2.1 million new cars registered in 2008,
a year which saw the British car market only affected toward the end by the global financial
crisis. The market is 34.4 percent on figures to November, compared with the previous year.
Some nine major car makers and six commercial vehicle manufacturers produce around
1.6 million vehicles each year. The industry employs, directly or indirectly, more than 850,000
people.
In recent years the sector has accounted for almost 10 percent of annual total manufacturing turnover value, and contributes exports valued at 25 billion pounds (about 40.4 billion U.S. dollars), which is 11 percent of total national export value.
Despite this the mass market now contains no British-owned car maker, with foreign firms such as Ford, BMW and Toyota all having large manufacturing bases in the country.
The financial crisis has hit motor manufacturers hard: the first warning signs of lower assembly activity appeared in late 2008. New car sales fell by 11.3 percent in 2008 to
2,131,795 vehicles.
Buying a car is the Britons' second biggest expenditure after buying a house, so the car market is highly vulnerable to changes in discretionary spending and falling consumer
confidence has damaged demand.
In the wake of the financial crisis the government introduced a car scrappage scheme, in
spring this year. It has given cash to buyers who exchange their old cars for new ones, in a bid to stimulate the market. If a buyer exchanges a car older than 10 years, he can get a 2,000 -pound (about 3,232 dollars) subsidy for his new one, 1,000 pounds from the government and 1,000 pounds from the motor industry.
The government fund of 300 million pounds (about 484.8 million dollars) is expected to
run out in February next year, and Lord Mandelson, the government's business secretary,
announced in the autumn that the scheme would be extended with a fresh 100 million pounds.
The scheme has been a success, and is seen as essential to the continued short-term well-
being of the sector.
New car registrations through the scrappage scheme totaled 251, 629 between May and November, and in November scrapped cars were 21.6 percent of all new car registrations, in line with rates recorded in previous months. Cars accounted for 98.5 percent of total vehicles through the scheme.
The scrappage scheme has helped lift overall new car registrations in each of the past five
months. Over the May to November period total new car registrations increased by 5.7 percent. Once the vehicles in the scrappage scheme have been stripped out of the figures, the market was down 15.9 percent. The scheme accounted for 3.9 percent of light commercial vehicles (LCV) volumes in November.
The dramatic fall in new car registrations as a result of the financial crisis has also been
seen in the LCV market. Total van registrations fell by 26.6 percent in 2008 with the total
market for commercial vehicles falling by 22 percent. This has worsened into 2009.
Turning to the poor performance of commercial vehicle production figures, Everitt said:
"Weak demand in key sectors of the economy and fragile business confidence continues to stall recovery in commercial vehicle output. Production volumes have fallen in every month since September 2008."
"While the November figures represent the smallest recorded fall in the past 14 months, the
sector is still down almost 60 percent on the year to date," Everitt added.
What can be done to stimulate the market? It is likely to take a further hit from Jan. 1 when
Value Added Tax returns to its normal 7.5-percent level. It was cut to 15 percent at the end of 2008 to help the economy at a critical moment.
The return to 17.5 percent will hit sales, and play a part in rising inflation.
The Bank of England said in its November inflation report: "CPI inflation fell to 1.1 percent in September, but is likely to rise sharply to above the 2 percent target in
the near term."
In the longer term spare capacity and unemployment will both drag down inflation, making
sales easier.
Everitt sounded a warning note for his sector, stating that 2010 was going to be a tough
year, and continued favorable policies were needed from governments.
Total vehicle production is still well below previous levels and 2010 is set to be another

tough year with considerable uncertainty at home and abroad. It is essential that governments
continue to sustain and strengthen economic recovery, improving access to credit and
encouraging investment in new technologies and products, he said.