Car production continued to slow last month but at the lowest rate this year, according to new figures.

The Society of Motor Manufacturers and Traders (SMMT) said that 199,616 cars were made in the UK in September, down 16.1 per cent on the same month last year.

But the dip was substantially less than in August, when car production dropped 31.5 per cent on the previous month.

The SMMT attributed the lower decline to the popularity of the Government’s “cash-for-bangers” car scrappage scheme, which was extended in September.

The scheme was first introduced in May with a limit of £300 million being put into the initiative by the Government. The extension, at a cost of £100 million, incorporates an extra 100,000 vehicles, inlcuding vans that are eight, rather than ten, years old.

Total car production for the year to date is still down 41.2 per cent compared with January to September last year.

Paul Everitt, The chief executive of SMMT, said: "The rate of decline in new car production slowed to its lowest level in a year with the volume of vehicles being produced for the UK market comparatively high. Demand is clearly being underpinned by the scrappage incentive scheme and the extension to the scheme will ensure that demand continues into 2010."

The figures for commercial vehicles were less positive, with the number of vehicles made last month dipping 53 per cent compared with September 2008. Production for the first nine months of this year is now down 61.6 per cent.

Mr Everitt said: "The UK economy is slowly emerging from recession, but businesses remain reluctant to commit to large capital investments and this is reflected in low demand for commercial vehicles."

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