Van production rises after 17 months in slump

An increase in demand for vehicles from car and van insurance policyholders may have helped boost auto production numbers last month.

Figures from the Society of Motor Manufacturers and Traders (SMMT) have shown that commercial vehicle output finally rose during December for the first time in 17 months.

Meanwhile, car output rose by 58.5 per cent in December 2009, marking the biggest increase in production since May 1976.

Among the reasons behind the increase could have been the lower VAT rate, which rose to 17.5 per cent in January.

"The significant rise in December vehicle production is welcome news and signals some greater stability across global automotive markets," commented SMMT chief executive Paul Everitt.

Engine production in the UK continued to be high, with twice as many powertrains built as cars. Almost three-quarters of the engines were exported.

Mr Everitt went on to say that while the figures are positive, both commercial vehicle and car production numbers are well below their former levels before the recession set in.

It is essential that a focus on better priced vehicle finance for consumers and businesses is maintained he suggested.

The expert concluded that he expects the year ahead will be "extremely challenging", but added that "the return of economic growth and a competitive exchange rate will help UK producers".

Earlier this month, the SMMT announced that British car production had slumped by almost a third during 2009 compared with the previous year's figures. Of those vehicles made, more than three quarters were exported.

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