Scrappage scheme eases decline

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Car production in July recorded the smallest monthly decline of the year so far following positive affects of the government’s scrappage scheme.

The latest figures from the Society of Motor Manufacturers and Traders (SMMT) showed that UK car output fell 17.9 per cent last month to 107,635 vehicles with total vehicle production down 23.7 per cent.

According to the SMMT, the easing decline reflected the impact of the scappage scheme, which allows motorists to trade in vehicles that are 10 years old or older for a £2,000 allowance on a new car.

However, car production for the year was 45.8 per cent down on the same period in 2008 following significant production cutbacks from UK car manufacturers. SMMT chief executive, Paul Everitt warned that continued assistance was required to support companies.

‘The UK motor industry is starting to stabilise but remains fragile,’ he said. ‘Industry needs government to deliver support through the Automotive Assistance Programme and encourage banks to provide access to much needed finance and credit.’

Despite an easing decline in car output, commercial vehicle production continued to fall steadily with output down 59.8 per cent to 8,440 vehicles in July and 63.8 per cent down so far this year.

Everitt added: ‘The commercial vehicle market is suffering from depressed demand across Europe. This continues to affect the level of commercial vehicle production. Furthermore, high stock levels mean that vehicle production may not recover as fast as the market.’

The SMMT’s figures were published ahead of a crucial meeting to decide the new owner of General Motors' European division, Vauxhall and Opel, which employees around 5,000 staff in the UK.

Brussels-based RHJ International and Canadian group, Magna, are both hoping to secure ownership of the business, which reports claim could result in thousands of job cuts across Europe.