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Tuesday 27th of October 2009
October 23, 2009    

UK car production slows but rate easing

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by Kay Murchie

According to the Society of Motor Manufacturers and Traders (SMMT), UK car production fell 16% in September compared with the same month last year.

However, the SMMT said it was the smallest fall for 12 months and was considerably less than the annual rate of fall of 31.5% reported in August.

The SMMT attributed the lower decline to the Government’s scrappage scheme, launched in May of this year.

The scheme, dubbed ‘cash for bangers’ pays consumers £2,000 to get rid of their old cars and replace it with a more environmentally friendly car.

The scheme has proved so successful that the Government extended the scheme earlier this month to cover an additional 100,000 cars and vans.

The scheme has resulted in a surge in car sales, according to the SMMT.

Commenting on today’s figures, Paul Everitt, SMMT’s chief executive, said: “The rate of decline in new car production slowed to its lowest level in a year with the volume of vehicles being produced for the UK market comparatively high. Demand is clearly being underpinned by the scrappage incentive scheme and the extension to the scheme will ensure that demand continues into 2010.”

In other news today, the Office for National Statistics (ONS) revealed that the UK economy shrank by 0.4% in the July to September period, meaning the country is still in recession.

The fall in GDP means it is the first time the UK has endured six consecutive quarters without growth - the first time since the ONS began gathering the data in 1955.

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