The extended scrappage scheme is being credited with boosting the number of cars being sold and produced in the UK.
Figures published by the Society of Motor Manufacturers and Traders (SMMT) show that while car production fell by 16.1% year-on-year in September, the figure is a dramatic improvement on the -33.2% year-on-year drop in sales that was recorded in August.
The scrappage scheme has already helped to increase new-car registrations in the UK, but now it has also been credited with increasing the number of cars built here.
Best figure for seven years
According to the latest figures, 36.7% of cars made by British factories are also registered here - the highest figure for six years.
The scrappage scheme has boosted the demand for small cars, which has been of particular benefit to Nissan's Sunderland factory, which produces the Micra and the Note.
The news has prompted the SMMT to revise upwards its forecast for the number of cars it estimates will be sold in the UK this year. The SMMT now predicts that 1.93 million cars will be delivered to British buyers this year.
That's a 100,000 increase on the estimate it released in July, although still substantially less than the 2.4 million cars that were sold in the UK in pre-recession conditions in 2007.