The Trade and Industry Committee of the House of Commons has published a new report into Britain’s car industry which urges companies and government to increase research and development to help protect jobs.

UK car production fell 10% in 2006 / 07, with a number of high-profile companies closing UK plants, including MG Rover and Ford’s Jaguar unit.

There is a trend for manufacturers to move production to countries where costs are lower. TVR Engineering Ltd., General Motors Corp.’s Vauxhall Motors Ltd. and PSA Peugeot Citroen are all scaling down UK production.

Part of the problem is overregulation, with European Union rules adding 5,000 euros to the average cost of a car made in Britain.

The report advises the industry that it will not be able to compete on the basis of low-cost and advise it to focus on high added-value processes and products which make the most of the UK’s strength in automotive design and innovation and its supply of skilled labour.

It suggests that the industry should adopt lean manufacturing techniques using modern equipment where it is feasible to upgrade facilities, and to strengthen the local supply chain.