Skip to content

Boost for economy as UK car sales soar

It is widely known that the export market has been driving the UK car industry's growth. With some 80% of production going abroad, this is great news for the balance of payments but it says less about the wider health of the UK economy.

It is widely known that the export market has been driving the UK car industry's growth. With some 80% of production going abroad, this is great news for the balance of payments but it says less about the wider health of the UK economy. We know that emerging markets are hungry for our prestige marques but really that says more about the health of these economies than it does about ours. It is great news then that the number of cars produced in the UK for sale in the domestic market increased by 38% in July.

Figures released by industry body, the Society of Motor Manufacturers and Traders (SMMT) show that UK based car manufacturers built 28,895 cars for sale in the UK during July. This represents an increase of 38% on the same period last year. For most people, cars are the second largest purchase behind houses, so a rise in purchases could indicate a resurgence in consumer confidence and the better availability of cash or credit to complete the purchase. Total car production rose by 7% to 128,870 but this rise was almost completely down to increased UK sales, with exports rising only by 0.6%. Analysts have put this lack of export growth down to continuing uncertainty in the EU, our biggest export market if taken as a whole.

The increase in domestic car sales is being touted as a sign of economic recovery in the UK, with SMMT chief executive, Mike Baunton, commenting: "Car manufacturing is continuing to follow the wider UK trend for more positive economic growth with a 7% rise in July. We are starting to see slight signs of recovery from Europe which will support stronger production levels this year."

The increased demand has resulted in some major expansions in UK car manufacturing plants. Nissan has lodged a planning application to extend its factory in Sunderland, which is already the biggest in the country. Jaguar Land Rover, meanwhile, has already announced the doubling in size of its West Midlands operation to cope with increased demand from emerging markets. Rachel Pettigrew of manufacturers' body, EEF, said: "There is a lot of divergence and variation in the manufacturing sector. Automotive has been one of the strongest performers coming out of the recession and since the start of the year we have really seen a pickup in domestic demand."

With growth figures for the wider economy still perilously close to recession, the news from the UK's car industry will be particularly welcome.

Posted by on

Back to August 2013

Back to top