UK car production increased by 7% to 128,873 units and home market demand is up 37.5% to help support the September plate-change.
According to figures from the SMMT, year-to-date UK car manufacturer volumes are also up by 1.9% to 893,263 units.
Mike Baunton, SMMT interim chief executive, said: “Car manufacturing is continuing to follow the wider UK trend for more positive economic growth with a 7% rise in July, supporting a 1.9% increase in the year so far.
"We are starting to see slight signs of recovery from Europe which will support stronger production levels this year, and UK manufacturers will continue to build and sevelop innovative, high-quality products that appeal to a global customer base.”
John Leech, UK head of automotive at KPMG, said: “This news will cheer the UK’s car manufacturers currently enjoying their planned summer shutdowns.
“With strong UK car demand from private buyers continuing to drive UK car production, I expect UK car production will grow by 5% in 2013. This will make it the UK’s fourth consecutive year of growth, contrasting sharply with the rest of Europe, which is likely to endure its sixth straight year of production decline.
“Our medium-term forecast also remains positive, with UK vehicle production set to grow from about 1.5 million to 1.9 million in 2016, based on manufacturers’ latest plans.”
Commercial vehicle (CV) output fell 11.8% to 7,942 units in July, although export demand did increase by 20.3%.
Year-to-date levels show fall of 13.3% during the first seven months of 2013 to 56,459 units.
Nigel Base, SMMT commercial vehicle manager, said: “Commercial vehicle manufacturers continue to battle against weak demand, despite a moderate increase in exports in July.
"The outlook for commercial vehicle manufacturing for the rest of the year continues to be tough, especially following the closure of the Ford facility in Southampton at the end of July.”