UK car production slump eases

| June 19, 2009 | 0 Comments

The Society of Motor Manufacturers and Traders (SMMT) has revealed today that car production continued its downward spiral in May but was the small drop in more than six months.

According to the SMMT, a total of 67,754 cars were made in the UK in May - a fall of 43% when compared to May 2008. Commercial vehicle production fell by more than 70% - a much worse figure than in any recent month.

The global economic downturn has resulted in a slump in demand for big-ticket items, such as cars. This has affected carmakers worldwide with many cutting back on production, slashing jobs and seeking funding to see them through the downturn.

Commenting on today‘s figures, Paul Everitt, SMMT chief executive, said: “Prompt action by manufacturers to realign supply with demand has been painful, but was necessary. There is now a direct link between demand in the marketplace and production volumes.”

In related news, earlier this week, it was reported that over 60,000 orders have been placed under the UK’s car scrappage scheme.

The scheme, which was introduced last month to boost the fall in demand for new cars, pays consumers to get rid of their old cars and replace it with a more environmentally friendly car.

The £300 million initiative gives motorists £2,000 when they scrap their vehicle (which must be at least 10 years old). The Government will contribute £1,000, with the remaining £1,000 funded by car firms.

The UK’s figures cover the time from which the scheme was announced at the end of April to 7 June.

The scheme will run until March 2010 or until the Government funding runs out.

Mr Everitt concluded: “The scrappage schemes in place across Europe are now beginning to have a positive impact although the full benefits will take a little longer to flow down to companies at all levels in the supply chain.”

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