UK car production hit 10-year high in 2015

By Costas Pitas

LONDON - British car output hit a 10-year high in 2015, the Society of Motor Manufacturers and Traders said on Thursday, but fell short of an industry forecast due partly to falling demand in Russia and China.

Output rose 3.9 percent to 1.59 million cars last year, the highest since 2005, helped by a 9 percent increase in the number of models produced by Jaguar Land Rover (JLR) [TAMOJL.UL], which overtook Nissan to become Britain's biggest automaker.

JLR, which had its first full-year production of its Discovery Sport sports utility vehicle last year and began building its XE sports sedan, made nearly 490,000 cars, just under a third of the national total.

Production of BMW's Mini cars (BMWG.DE) in Oxford and Toyota vehicles in central England also rose significantly.

Just over three quarters of British-built cars are sold abroad with demand from the EU, Britain's largest export market, rising 11.3 percent, helping to offset a 37.5 percent drop in exports to China and a 70 percent fall to Russia.

SMMT Chief Executive Mike Hawes saw problems including over a British referendum on whether to remain in the EU, which accounts for nearly 60 percent of exports.

"Europe is our biggest trading partner and the UK's membership of the European Union is vital for the automotive sector in order to secure future growth and jobs," he said.

Nissan recorded a 4.7 percent drop in output at its north of England plant last year and its manufacturing chief in Europe told Reuters that Russia, which was its most important foreign destination in 2014, was now "impossible" to export to.

"Russia used to be our biggest market and because of the currency effect we stopped shipping cars into Russia," Colin Lawther said, citing the weakening of the rouble over the last 18 months during which Western sanctions have been imposed.

Overall British exports rose 2.7 percent in 2015 but the number of models exported to China, Britain's third-biggest market, fell sharply as an economic slowdown hit car demand.

The drops in both Russia and China contributed to the British car industry failing to meet an industry forecast of building 1.66 million cars last year.

In October, the trade body also pushed back a longer term goal of building a record number of cars by 2017.

(Reporting by Costas Pitas; Editing by Ruth Pitchford)