UK Production Figures Show Benefit of Scrappage Schemes

Car production in the UK dropped 43.0 per cent to 67,754 units during May, the smallest year on year decline during 2009 so far. And while the Society of Motor Manufacturers and Traders comments that the outlook remains difficult, the trade association believes positive signs are evident as manufacturers restart production following the implementation of scrappage schemes. Commercial vehicle production, on the other hand, plummeted 73.5 per cent to 4,692 units – the largest monthly drop this year.

“Prompt action by manufacturers to realign supply with demand has been painful, but was necessary,” stated SMMT chief executive Paul Everitt. “There is now a direct link between demand in the marketplace and production volumes,” said Paul Everitt, SMMT chief executive. “The scrappage schemes in place across Europe are now beginning to have a positive impact, although the full benefits will take a little longer to flow down to companies at all levels in the supply chain.

“Commercial vehicle production is severely affected by low business confidence and economic uncertainty,” Everitt added. “Businesses across the economy are still holding back on new expenditure and will need to see better access to finance and stronger domestic demand.”