Car production gains highest for 34 years

Figures yesterday (18 February) from the Society of Motor Manufacturers and Traders (SMMT) also showed commercial vehicle production up 9.6% to 9,156 in January – the second consecutive monthly rise – while UK engine production was up 26.3% to 193,265 in January. SMMT chief executive Paul Everitt (pictured) said: "Vehicle and engine production rose for a third successive month in January, demonstrating the continued success of global scrappage incentive schemes. Despite the close of the UK scheme next month, SMMT expects a modest recovery in 2010 output as economic growth, a competitive exchange rate and the introduction of innovative new models to UK plants help to lift manufacturing levels above those seen in 2009." At Barclays, head of motor retail Keith Parry said he believed the figures were encouraging. "It is good to see ongoing positive sentiment around the automotive sector," he went on. "That said they are in comparison to a very low volume from last year and are perhaps not unexpected. The motor sector as a whole de-stocked considerably last year and the general feeling was that this exercise had gone as far as it could. There was always going to be a need to re-stock and these numbers suggest that this exercise is well under way. "Customer feedback suggests demand for new vehicles is currently holding after a strong end to last year. There are certainly signs that demand has continued through January and the consensus view is that Q1 2010 will be reasonably good. We are expecting Q2 to be more challenging following the end of the scrappage scheme. There is however an opportunity for motor manufacturers to work with retailers on marketing campaigns which to all intents and purposes will look to mirror the benefits of the scrappage scheme through a different guise. We have already seen the introduction of 'swappage' schemes which are encouraging ongoing demand from the public for new vehicles whilst also clearly providing an additional flow of used vehicles which remain in short supply. "The outlook for the second half of 2010 is less clear but will undoubtedly remain dependant on an innovative approach to marketing as the consumer remains focused on securing a good deal."