The number of new cars made in the UK declined 17% in July compared to the same month last year, but this is the smallest drop of the year so far, according to figures released by the Society of Motor Manufacturers and Traders (SMMT).

The decline to 107,635 new cars has led to hopes that that industry is beginning to stabilise and that the car scrappge scheme is having a positive impact.

"The slowdown in the rate of decline of UK car production reflects the impact of the scrappage incentive schemes in place across Europe. The UK motor industry is starting to stabilise but remains fragile," said Paul Everitt, SMMT chief executive.