Data from the Society of Motor Manufacturers and Traders (SMMT) released today revealed car output in the UK rose 7% in July with output expected to grow further in the second half of the year.
The rise in July supported a growth trend since the start of the year with output up 1.9% since the start of 2013.
Mike Baunton, SMMT interim chief executive, is confident of stronger production levels for 2013 as Europe shows signs of recovery.
“Car manufacturing is continuing to follow the wider UK trend for more positive economic growth,” said Baunton.
“We are starting to see slight signs of recovery from Europe which will support stronger production levels this year, and UK manufacturers will continue to build and develop innovative, high-quality products that appeal to a global customer base.”
The decline of European car sales seems to be coming to an end with registrations of new cars in Europe rising 4.8% in July compared to the same month a year ago.
Even austerity hit Spain, Portugal and Greece, where sales are roughly half pre-recession levels, showed double-digit gains.
With the Eurozone back out of recession consumer confidence is starting to rise giving car manufacturers reason to be confident for the second half of the year.
John Leech, UK head of automotive at KPMG, expects car production to grow by 5% in 2013.
Medium-term forecasts also remain positive, with UK vehicle production set to grow from about 1.5m to 1.9m in 2016.
Leech said: “This news will cheer the UK’s car manufacturers currently enjoying their planned summer shutdowns. With strong UK car demand from private buyers continuing to drive UK car production.
“This will make it the UK’s fourth consecutive year of growth, contrasting sharply with the rest of Europe, which is likely to endure its sixth straight year of production decline.”