Britain’s production of cars and commercial vehicles surged by 28 per cent in 2010 to nearly 1.4m units and the industry body representing carmakers said it expected production to grow further this year.

Production of cars rose by 27 per cent last year to 1.27m units, the Society of Motor Manufacturers and Traders said on Thursday. The industry produced 123,019 commercial vehicles – up 36 per cent on 2010 – and 2.39m engines, a 16 per cent rise on last year.

However, the data showed production softening somewhat in December, with total vehicle production at 88,028 units, 23 per cent more than in the same month a year ago.

Britain’s car industry is almost entirely foreign-owned, but the sector remains one of the economy’s largest.

Alongside premium producers led by Jaguar Land Rover, owned by Tata Motors, and Bentley, owned by Volkswagen, Nissan, Toyota, Honda, General Motors and Ford Motor have plants making cars, vans or engines in the UK, most of which are shipped to the Continent or farther afield.

The industry accounts for 9 per cent of total exports, has turnover of £40bn, and employs more than 700,000 people directly or indirectly. It exported more than 1m vehicles and 1.7m engines last year, according to the SMMT.

“UK vehicle production is leading the manufacturing recovery with output in 2010 up 27.8 per cent”, Paul Everitt, the SMMT’s chief executive said.

World car production is projected to have reached record levels of at least 70m units last year, thanks to surging sales in emerging markets such as China and recovery from a deep sales slump in mature ones.

Analysts said that the SMMT’s forecast of continued growth was realistic as manufacturers began producing new vehicles like Nissan’s newly launched Juke, GM’s Vauxhall/ Opel Astra, or Land Rover’s Evoque, which is due to launch production later this year.

“You’ve got a number of incremental product programmes – they will add volume – and you have an improving market situation,” said Michael Gartside, senior analyst with PwC Autofacts. “There are a number of factors that should combine to increase output this year.”

PwC expects Britain’s production of light vehicles – including both cars and light commercial vehicles – to rise to 1.45m this year, and global car production to rise to more than 75m units.

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