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Is the UK car industry turning a corner?

There is no doubt that the UK car industry has suffered more than most in the ongoing UK recession but there are signs that the worst may be over. Even though production of new cars was down again in May, 43% less than the same period last year, the month on month fall was the smallest in 2009 so far. While this is only a small snippet of good news it is the first piece of good news we have seen in the sector for some time.



There appear to be two factors in play here, one being the introduction of the UK government's scrappage scheme which has seen a number of "old bangers" traded in for discounts on more efficient vehicles as well as a realignment of supply and demand. The Society of Motor Manufacturers and Traders is suggesting that the realignment of manufacturing to demand is nearing an end with cars now literally made to order to cover demand and nothing else. It is also worth remembering that there were substantial stockpiles of new cars around the UK although thankfully these have diminished somewhat over the last few weeks.



However, even the worst may be over there is still a long way to go for the UK car sector.

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