Car output falls 31.5% in August

One in three cars built last month was for the UK market

The number of new cars made in the UK fell 31.5% in August from the same month a year earlier, industry figures have shown.

There were 56,737 cars made last month, the Society of Motor Manufacturers and Traders (SMMT) said.

But the number of cars built for the UK market reached a near five-year high as the car scrappage scheme boosted sales.

The SMMT called for the scheme, which was introduced in May, to be extended, saying recovery was still fragile.

The drop in production was bigger than the 17.9% fall seen in July, but many car plants have extended shutdowns in August.

Funds running out

The UK car scrappage scheme pays a £2,000 incentive to new car buyers who scrap a vehicle that is more than 10 years old.

It is currently due to end in February, or when the £300m the government has allocated towards the scheme runs out - whichever happens first.

The SMMT said the fund was likely to run out by the end of next month.

Specific action is needed to address business confidence and encourage investment in new business vehicles Paul Everitt, SMMT chief executive

"The scrappage incentive scheme has had a positive impact on car production with one in three cars built in the UK last month for the home market and total volumes starting to stabilise," said SMMT chief executive Paul Everitt.

"However, underlying demand remains weak and the recovery is still extremely fragile. A continuation of the scrappage incentive scheme through to the original close date of 28 February 2010 would help to sustain growth and bridge uncertainties associated with the ending of VAT discount."

On Thursday, Jaguar Land Rover said it would be closing one of its West Midlands plants in the next decade as it seeks to consolidate production.

Address business confidence

The SMMT's figures showed that 19,173 cars were built for the home market, a third of the total number produced. Cars for export were down by 37%.

The number of commercial vehicles produced fell by 48.5%, although this was the smallest drop of the year for the sector.

The SMMT said the continued fall in commercial output reflected "ongoing weakness" in the market.

"Specific action is needed to address business confidence and encourage investment in new business vehicles," Mr Everitt said.