Output from British car manufacturers soared in October in the largest monthly increase for the whole of 2013, according to industry group the Society of Motor Manufacturers and Traders.

Demand is recovering from the EU, the UK's biggest export market for cars, and significantly more Britons are buying homemade vehicles.

SMMT figures show car output rising 17.4% in October on the same month a year before, to 160,854 units. Manufacturing for the domestic market jumped 52.4% and export growth lifted 11.4% amid a second consecutive month of rising demand from Europe.

"More than 15 brands build 50-plus models of car across the UK with volume and niche offerings providing a wealth of choice for our home and export markets," said Mike Hawes, SMMT chief executive

"With European demand showing early signs of recovery, we expect production to continue positively in the coming months."

In 2012, the UK car market grew at its fastest rate in 11 years as the industry recovers from a lengthy decline.

The volume of UK car registrations in 2012 lifted by 5.3% to 2,044,609 units. Despite the improving performance, the new car market was still 14.9%below its pre-recession level of 2.4 million units in 2007.

The automotive industry will receive a £500m boost from the government over a decade to make the country a global centre for the research and development of new low carbon technologies for vehicles.

Together with £500m of investment from the industry itself, the £1bn cash pile will pay for the creation of an Advanced Propulsion Centre (APC). It is set to secure thousands of jobs that are reliant on the production of vehicle engines in the UK and create many more at supply chain firms.

"The UK automotive sector has been incredibly successful in recent times, with billions of pounds of investment and new jobs. This has been achieved by government and industry working together," said Business Secretary Vince Cable.

"With the next generation of vehicles set to be powered by radically different technologies we need to maintain this momentum and act now. Our industrial strategy will ensure we keep on working together to make our automotive industry a world leader."