UK car production on track to overtake France by 2018

LONDON (REUTERS) - Britain may overtake France as Europe's second largest automotive producer within the next five years if United Kingdom (UK) car sales and exports maintain current strong growth, industry executives said on Thursday.

"All the indications appear to be saying yes Britain will be second in a few years," Mr Tim Abbott, managing director of German carmaker BMW's UK operations said on the sidelines of the SMMT automotive conference in London.

"It will be about the demand for the cars made in the UK but that looks to be there judging by the recent performance of the likes of Jaguar Land Rover, Nissan and BMW."

Last year 1.5 million cars were produced in Britain, compared to 1.9 million in France, according to European car industry association (Acea) data. However, volumes are slipping in France, largely down to slowing sales at its major carmakers, PSA Peugeot Citroen and Renault.

BMW's Mr Abbott said the output from Britain's eight main car plants could hit two million by 2018, ahead of the previous record of 1.92 million vehicles set in 1972. Europe's biggest producer, Germany, churned out 5.5 million vehicles last year.

Demand for new cars in recession-hit Europe fell to a 17-year low last year as euro zone unemployment reached record highs, credit dried up and households focused on repaying debt.

Britain has been the continent's only bright spot, delivering 15 straight months of growth in car sales.

Japanese carmaker Nissan's plant at Sunderland in north-east England is operating at close to full capacity, while production at BMW's Mini factory in Oxford, south England, is on the rise, helped by growing demand for British built cars in emerging markets.

"You could see it happening (UK overtaking France) if UK plants are at full capacity, which they are not far off being,"said Nissan's executive vice-president Andy Palmer.

Last year, 82 per cent of the cars made in the UK were shipped overseas, according to the SMMT, with emerging markets now accounting for a third of the total.

Nissan's Palmer also said Britain needed to persuade more of the world's biggest car manufacturers and suppliers to base their operations in the UK to unlock further growth.

Britain took a step towards that goal on Thursday when British business secretary Vince Cable announced the creation of the Automotive Investment Organisation (AIO), which will be funded with up to 3 million pounds (S$5.9 million) over the next two years.

Led by Mr Joe Greenwell, the former chairman of Ford in Britain, the IAO will seek to implement the government's automotive industrial strategy, which is due to be released shortly.

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