The decline in the production of new cars appears to be slowing down, according to the SMMT.

According to latest figures from the Society of Motor Manufacturers and Traders (SMMT), the number of new cars produced in July in the UK fell 17.9%.

The new figures show that the decline in car production in the UK is slowing down. Despite another monthly fall in the production of new cars in the UK, the drop to 107,635 cars is the smallest of the year so far.

Car production for the year to July 2009 was down 45.8% to 518,375.

The SMMT said the slowdown in the rate of decline can be attributed to the car scrappage scheme which began in earlier this year. 

The car scrappage scheme was launched by the government on 18 May 2009 and offers car owners £2,000 to scrap cars older than 10 years old for a new car. The £2,000 will be paid jointly by the government and the automotive industry.

Paul Everitt, SMMT Chief Executive, said: “The UK motor industry is starting to stabilise but remains fragile.

“Industry needs government to deliver support through the Automotive Assistance Programme and encourage banks to provide access to much needed finance and credit.”

The commercial vehicle market continues to decline sharply. The SMMT reported a 59.8% fall in the production of commercial vehicles to only 8,440 in July.

Mr Everitt added: “The commercial vehicle market is suffering from depressed demand across Europe. This continues to affect the level of CV production.

“Furthermore, high stock levels mean that vehicle production may not recover as fast as the market.”