UK car production falls by half

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The number of new cars produced in the UK fell by more than a half in March compared to a year earlier, industry figures have shown.

The 51.3% drop is a slight improvement on the record drop of 59% in February, the Society of Motor Manufacturers and Traders (SMMT) figures show.

The SMMT said it would be "some months" before there was any significant increase in output.

Carmakers are struggling with a massive drop in demand during the recession.

Many major manufacturers have been forced to suspend or cut production.

For example, Honda has closed its Swindon plant for four months, while Toyota has reduced pay across its UK factories by 10%.

Scrappage scheme

In order to boost demand, the government announced in this week's Budget an incentive scheme for motorists to trade in old cars for new ones.

The scheme, which runs until March 2010, provides motorists buying new cars with a £2,000 discount if they trade in cars over 10 years old.

"The figures show that urgent action is necessary to kick-start demand in the motor industry and the introduction of a UK scrappage incentive scheme is an important first step," the SMMT said.

Other European countries have implemented scrappage schemes that have proved successful in boosting demand for cars.

While sales have been falling in the UK, new car registrations in Germany rose 40% in March and by 10% in France after both countries adopted incentive schemes.

Big falls

The SMMT figures show that the UK produced 61,829 cars in March.

In the first three months of 2009, 183,010 cars were produced, a fall of 56.6% on the same quarter last year.

The number of cars exported in the period, which account for more than three-quarters of all cars produced in the UK, fell by 55%. The number produced for the home market fell by 61.6%.

Total production, which includes commercial vehicles, was down 57.4% in the first three months of the year compared with the same period in 2008.

Meanwhile, figures from the European Automobile Manufacturers' Association show that new European commercial vehicle registrations fell by 35.6% in the first three months of this year.