KPMG has issued an upbeat assessment of prospects for the UK car market and automotive industry in 2014.

John Leech, KPMG Head of Automotive, noted that 2013 has been a very good year for the auto industry in Britain. "The latest UK car manufacturing figures highlighted that 1,286,287 cars were produced in the first 11 months, a rise of 5.4 percent [1] with sales also up by 9.9 percent. The current sales and production run rates are back at pre-recession levels last seen in 2008."

In contrast with the situation in much of Europe, the UK's car market is almost back to the long-run average, Leech says.

"UK car sales will grow in 2014 but at a slower rate than in 2013 as we are almost back to our natural long-run average. The rate of growth depends principally on when the car manufacturers pull back on the cheap credit that is currently pump-priming the market. If this cheap credit remains available throughout next year then there is an increasing risk of oversupply of new cars which could raise anxiety regarding a potential shock fall in used car residual values."

Leech also says that car production is set for growth in Britain again in 2014, with European car production also set to grow..

"UK car production will grow again for the fifth year running as European car sales start to slowly rise once more. This should also see European car production finally turnaround and grow in 2014 for the first time in seven years."

The automotive component supplier sector will also see activity in the coming year, Leech said: "M&A activity will jump in the automotive component supplier sector from a surge of inward investment into the UK to supply the rising UK vehicle production, which I forecast to reach 1.9 million vehicles in 2017 (up by over 25 percent on 2007 production levels). By contrast, France, Italy and Spain are expected to be making 33 percent, 28 percent and 17 percent fewer cars in 2017 compared to 2007 respectively. Germany on the other hand will only be just back to where it started from."

He also said that prospects for electric cars will improve.

"According to KPMG International's 14th Global Automotive Executive Survey, consumer enthusiasm for electric cars in 2013 failed to ignite but the outlook in 2014 will start to brighten as range-extended battery-powered cars are launched, like the new 2014 BMW i3."

Forecasting developments in driverless cars, Leech said: "New self-driving features will be deployed in executive cars such as 'traffic-jam assist' which will see cars driving themselves in low speed traffic jams."

"The focus on innovation by the UK government will also help the development of driverless and electric cars. Plans to test driverless cars in the UK by global car manufacturers will push the UK as a player in driverless car technology."