Car production in the UK is expected to hit an all-time record level of two million units by 2017 as the industry enjoys strong domestic and international demand.

The Society of Motor Manufacturers and Traders (SMMT) said car production rose to a six-year high in 2013, increasing 3.1% to surpass 1.5 million units. At the current pace of production, Britain could become the third-largest car manufacturer in Europe, according to the society.

"2013 demonstrated the value of the UK's diverse car manufacturing industry, as surging home demand and robust exports outside Europe saw output grow 3.1% to over 1.5 million units," SMMT CEO Mike Hawes said in a statement

"UK automotive investment announcements exceeded £2.5 billion in 2013, reinforcing industry analysts' suggestions that the UK could break all-time car output records within the next four years."

Industry analysts noted that the significant pace of production could help the country post a new record of manufacturing within three years. With production at 1.92 million units, 1972 is currently Britain's record year of car manufacturing.

"Today's figures are another sign that the British car industry is going from strength to strength – with one vehicle rolling off a production line somewhere in the UK every 20 seconds," Business Secretary Vince Cable said.

Domestic and Foreign Demand

In 2013, domestic demand for cars rose by 21.8% to 308,000 units but international demand dipped 0.9% to 1.2 million units. Exports represented 79.6% of the UK car production in 2013.

While the European market has struggled with tough economic conditions, overall export volumes have been bolstered by strong growth in demand for UK-built cars in other locations, the SMMT said.

China is set to become the UK's largest non-EU market for cars surpassing the US and Russia, as exports to the Asian country have risen rapidly over recent years.

"Our success lies in the appetite from countries around the world for British cars. Around 80% of the 1.5 million cars we produced last year were exported – a testament to the diverse, high quality of British manufacturing," Cable noted.

Cable added that the growth also reflects the success of the recent tie up between the government and the car industry. The government has invested £1bn (€1.2bn, $1.7bn) in the industry with a view to spurring jobs and economic growth.

"This will give businesses the confidence to invest, speed up development on vehicles of the future and keep the UK as a world leader in cars," Cable added.

Nissan was the No 1 car producer by volume in Britain in 2013, followed by Jaguar Land Rover and Toyota. Other major manufacturers include BMW's Mini, Honda and General Motors' Vauxhall.