The month of July experienced a heavy plunge in the production of the cars to the tune of 8.9% than last year, which accounts for 98,000 cars, as revealed by the Society of Motor Manufacturers & Traders.

In the last month, there was a slump of 7.5% in the total vehicle production. In the UK, the car production climbed down 9%. The demand for cars picked up in 2009, with the launch of car scrappage scheme by Government.

The data is based on the increasing production of cars consecutively for eight months. Paul Everitt, the Chief Executive of SMMT, stated that the fall in the production of the cars was contributed by the pulling down of the scrappage scheme that used to benefit traders with a £2,000 incentive for selling 10 year old car to a new one.

He said, “UK car and engine production was down in July for the first time since October 2009. The easing of demand was anticipated following the end of scrappage incentives in markets around Europe”.

As showcased by SMMT, in July the production of commercial vehicles surged 10.7% to 9,494. In January-to-July period, their production had increased to 43.2%. The number of engines produced also dropped 3.4%.

Also, in August, the orders with the UK factories mounted up the highest in two years. This shows that manufacturing sector projections are optimistic, as stated by Lai Wah Co, the CBI's head of economic analysis.