As expected, UK car production almost halved over last year in May as UK plants continued to cut production in order to continue to wind down excess stock.

Figures released by the SMMT show that car production in May was down 43% - the smallest decline of of the year. Analysts say that the year-on-year comparison will be improving as the year progresses and the comparison is against increasingly collapsed volumes.

Industry analysts expect European car production to turn up towards the end of the year.

May car production in the UK was 67,754 units. In the first five months car production totalled 319,022 units,  54% down on last year.

"Prompt action by manufacturers to realign supply with demand has been painful, but was necessary. There is now a direct link between demand in the marketplace and production volumes," said Paul Everitt, SMMT chief executive. "The scrappage schemes in place across Europe are now beginning to have a positive impact, although the full benefits will take a little longer to flow down to companies at all levels in the supply chain."
There was further evidence of the recession and its impact on business in collapsed commercial vehicle production figures. CV production was 73.5% down on last year in May at just 4,692 units.

"Commercial vehicle production is severely affected by low business confidence and economic uncertainty," said Everitt.

"Businesses across the economy are still holding back on new expenditure and will need to see better access to finance and stronger domestic demand."