Higher exports fuel bounce in UK car production

UK car production bounced back last month thanks to an increase in exports, the industry’s trade association revealed on Thursday.

Car production increased by 3.5% in October, the the Society of Motor Manufacturers and Traders said, with 157,056 cars rolling off production lines during the month.

While domestic demand skidded lower for the ninth month in a row, down 2.9%, this was more than offset by exports clicking into a higher gear with a 5% increase.

Just over 82% of all UK-built cars were shipped abroad in October, the highest proportion so far this year, mostly to Europe.

Lower domestic production was attributed by the SMMT to lower business and consumer confidence, combined with confusion over government policies towards diesel.

Over the full year, the UK is forecast to produce 1.73m vehicles, according to this month's independent production outlook from AutoAnalysis.

With an annual output that is, at best, static compared with last year was "worrying news for the sector", said SMMT chief Mike Hawes, although he was encouraged to see positive growth in exports this month and a slight increase in overall output.

"Production for British consumers, however, has continued to fall as domestic demand for new cars decreased for the ninth month this year amidst continued uncertainty over both Brexit and the government's air quality plans."

Alex Buttle, director of car buying comparison site Motorway, said after the torrid time the car industry has had over the past few months, it was a relief to finally have some good news.

"Unfortunately positive export sales are rather overshadowed by domestic sales falling again. The challenge for the car industry will be how it reverses this trend.

"Domestic sales have been hit by a combination of faltering consumer confidence, a squeeze on household finances and Brexit fears. It's a battle the industry is losing at the moment, and it really needs the Government's help to dig itself out of a giant hole.

"Yesterday, the Chancellor put his full support behind electric cars by announcing a £400m budget for charging points. Tax breaks for AFVs would be an obvious first step for a struggling sector."