Car production was up 7.9% for the year-to-date but fell slightly for the second successive month in June.

Paul Everitt, Society of Motor Manufacturers and Traders chief executive, said: "At the British International Motor Show at ExCeL London this week, I showed prime minister Gordon Brown a selection of the vehicles produced in the UK.

"He took great interest and commented that he is looking to provide incentives for the take-up of electric and greener vehicles. Manufacturers discussed with him how they are working to develop a portfolio of technologies to deliver lower carbon motoring. The main message coming through from industry is that a stable economic framework is needed in which to compete."