Fewer UK vehicle and parts makers deem it necessary to move production to low-cost countries, a survey shows.
Many car producers remain committed to the UK
"Automotive manufacturing is alive and well and has a bright future," said Roger Putnam, president of motor industry body SMMT.
Only 46% of the industry executives now believe such moves are necessary, compared with 56% a year ago, the SMMT survey shows.
Eight in 10 companies say the next five years offer good business prospects.
"Productivity has improved, the skills gap is narrowing and business prospects are promising," said Mr Putnam.
The upbeat survey follows a string of bad news for UK car makers, including TVR's plans to move abroad, Peugeot's decision to close its Ryton plant, MG Rover's collapse and Jaguar's losses, to name but a few.
But there have also been good news, with the Mini's expansion, Bentley's soaring sales and the revival of the motor show in London.
The industry leaders' main concern remains that ever more legislation will force up costs, with 91% of the respondents to the survey highlighting this as a threat to their businesses.
However, past concerns about the cost of legislation appear to have been overdone.
This year, 89% of the industry chiefs said legislation had caused costs to rise significantly in the last five years.
That is down from 93% in last year's survey.
Concerns about future legislation costs have also fallen from 2004, when 95% of the respondents highlighted this as a major concern.