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21st May 2010

The number of cars made in Britain increased by 44 per cent last month compared with the same period last year, industry data showed yesterday.

The growth in manufacturing came despite a slowdown in overall sales in the same month.

A total of 98,290 cars were made in April, the Society of Motor Manufacturers and Traders said. Product launches and the introduction of new technologies helped to sustain demand even though there was an expected slowdown following the end of the scrappage scheme, Paul Everitt, chief executive of the society, added.

New car sales rose by 11.5 per cent last month year-on-year. This was less than half the increase in March, which 26.6 per cent.

After a weak start to last year, when manufacturers such as Honda were forced to halt several production sites due to falling consumer demand, the car industry was given a boostby the Government’s “cash-for-bangers” scrappage scheme, which began in May and ended on March 31 this year. The scheme offered discounts to buyers who traded in older cars.

At least 330,000 cars were sold under the scheme — a fifth of all cars sold in the period. The Government estimated that 4,000 jobs with manufacturers and suppliers were supported by the scheme.

Howard Archer, chief UK and European economist at IHS Global Insight, said: “With the car scrappage scheme now at an end and with VAT having risen back up from 15 per cent to 17.5 per cent at the beginning of January, there is a very real danger that private car sales will fall back markedly over the coming months.”