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Domestic demand falls despite rise in UK car production

Mike Hawes, SMMT chief executive

UK new car production increased in October despite the continued decline an domestic demand, according to figures released by the Society of Motor Manufacturers and Traders (SMMT).

A total of 157,056 vehicles left UK factories last month, a 3.5% rise compared with the same period in 2016, as exports rose 5%, boosted by demand for new models in overseas markets.

Production for the UK continued to reverse, falling 2.9% and making October the ninth month of decline at home this year as 82.1% of all UK-built cars were shipped abroad.

Just 28,178 cars were produced for domestic buyers with the SMMT blaming “lower business and consumer confidence, combined with confusion over government policies towards diesel”.

Year-to-date figures show production for the home market decreased by 6.8% or almost 22,000 units.

Exports have fared better, the SMMT reported, broadly stable so far in the year at 0.1%, while overall output is down 1.6%.

SMMT chief executive, Mike Hawes, said, “Production for British consumers has continued to fall as domestic demand for new cars decreased for the ninth month this year amidst continued uncertainty over both Brexit and the government's air quality plans.

“It's important that confidence is restored to the new car market, as sales of the latest cleaner, greener cars not only address air quality concerns but speed up activity on factory lines across the UK.”

The SMMT’s latest independent production forecast revised the expected UK output for 2017 down to 1.73 million, lower than previous SMMT expectations of around 1.8 million.

The revision is due in part to the decline in domestic demand, but also because of lower than expected production levels of certain models as some approach the end of their lifecycles.

Hawes added: “The latest independent UK forecast report is worrying news for the sector, predicting annual output which is, at best, static compared with last year.

“The industry needs stability and a clear roadmap for Brexit if we are to encourage investment and arrest the decline in both the market and business confidence."

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