Data from the SMMT shows that UK car manufacturing grew 7% year-on-year in July, with sites across the UK making 128,873 units.

Year-to-date volumes are up 1.9% to 893,263 units. The SMMT said that home market demand was up 37.5% in month to support the registration plate change in September

“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,” said Mike Baunton, SMMT Interim Chief Executive. 

“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 develop innovative, high-quality products that appeal to a global customer base.”

John Leech, UK head of automotive at KPMG, forecast that the positive trend will continue through the rest of 2013 and noted that demand has bottomed out in Europe.

“Continuing its upward trend, car output in the UK rose 7% in July and is up 1.9% so far this year. Yet even better news is expected in the second half of 2013, as the decline in European car sales looks finally to have bottomed-out, with registrations of new cars in Europe rising 4.8% in July compared to the same month a year ago,” he said.  

“Even austerity hit Spain, Portugal and Greece, where sales are roughly half pre-recession levels, showed double-digit gains.  With the Eurozone back out of recession, consumer confidence is starting to improve, giving UK car manufacturers confidence that the second half of 2013 will see greater production volumes than the first.  

“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.”