New car production dropped by 17.9% in July to 107,635 units and is 45.8% down year-to-date.

Despite the drop, the pace of in the decline of car production has started to slow and the Society of Motor Manufacturers and Traders (SMMT) believes this is due to the scrappage scheme.

Paul Everitt, SMMT chief executive, said: “The slowdown in the rate of decline of UK car production reflects the impact of the scrappage incentive schemes in place across Europe.

“The UK motor industry is starting to stabilise but remains fragile. Industry needs Government to deliver support through the Automotive Assistance Programme and encourage banks to provide access to much needed finance and credit.”

Commercial vehicle production saw a 59.8% drop in July down to just 8,440 units and Everitt said high stock levels and depressed demand across Europe would mean CV production levels may not recover as fast as the market.

• To download the full table of July production figures from the SMMT click here.