UK car production saw a sharp increase in January, rising 64.8% from the same month the previous year.

That was the biggest year-on-year increase in monthly production since May 1976, the Society of Motor Manufacturers and Traders (SMMT) said.

Some 101,190 cars were produced in January, up from 85,316 in December.

Car production levels fell to a 25-year low in 2009, but the SMMT said it expected “modest growth” in the year ahead.

“Vehicle and engine production rose for a third successive month in January, demonstrating the continued success of global scrappage incentive schemes,” said Paul Everitt, SMMT chief executive.

But the UK scrappage incentive scheme that commenced in May last year comes to an end next month, having been extended in September.

The SMMT estimates the scheme – which offers a £2,000 incentive to scrap old cars and buy new ones – has been responsible for about a fifth of all new car registrations since its introduction.

Overall 2009 was a subdued year for automobile manufacturers following the collapse of the market in the wake of the credit crisis. Car production fell 30.9% from the previous year.

However, Mr Everitt said he expected the recent recovery to continue, despite the ending of the UK scheme.

“SMMT expects a modest recovery in 2010 output as economic growth, a competitive exchange rate and the introduction of innovative new models to UK plants help to lift manufacturing levels above those seen in 2009.”

Source : BBC News