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UK car production slumps, state help sought

Fri, 21 Nov 2008

By Digby Fullam

Motor Industry

21 November 2008 14:30

The full effect of the downturn in the global economy is being felt by the UK motor industry, new figures out today reveal. Car production at British factories fell by 29.5% from October 2007's figure. 

That makes it the worst October production figures since 1991 which, if you’ll cast your mind back, was the last recession. The Society of Motor Manufacturers and Traders blamed the slump on 'a rapid reduction in demand for motor vehicles.'

It’s not just us Brits that aren’t buying cars, either. UK export production is also down 24% from this time last year, explaining why everyone from Honda to Bentley, Mini to Nissan are shutting down factories and cutting back on shifts.

The SMMT is calling for prompt Government action to help beleaguered car makers. It wants the proposed ‘showroom tax’ and increased VED tax rates to be scrapped, along with a series of aid packages for manufacturers. 

The trade body is asking Gordon Brown for financial support for manufacturers, increased allowances for fleet buyers, and the removal of restrictions on expensive cars (Britain produces many top-tier models, don't forget). It's also asking the Government to support the training of automotive industry workers.

Expect to hear the Government’s response in chancellor Alastair Darling’s pre-Budget report on Monday. Meanwhile, the US car makers have had their request for state aid rejected at the first post after Democratic leaders voted out the $25 billion aid package. They have until early December to resubmit a survival plan that could qualify for assistance.

Yes, actually. Jaguar’s total UK sales were up 22% last month compared to October 2007, in stark contrast to their competitors. A spokesman put it down to the success of the new XF which has clocked up 29,000 global sales since launch in March.

By DigFullam