Output increased to 159,726 vehicles thanks to a 5 percent rise in the number of models sold abroad, representing more than three quarters of Britain's total output, the Society of Motor Manufacturers and Traders (SMMT) said.

Year-to-date output rose 10.5 percent to 1.3 million cars, with exports benefiting from the depreciation in the value of sterling since the country's June 23 referendum to leave the European Union, although the long-term effect on production remains unclear.

It generally takes around two to three years from the point a carmaker decides to build a new model at a plant and the first car rolling off the production line, which means that current manufacturing is based on pre-Brexit investment choices.

Japanese carmaker Nissan, which runs the country's biggest car plant, will decide next month whether to build its next Qashqai model in Britain in the first major investment decision affecting the country's car industry since the vote.

Following signs that Britain is headed towards a "hard Brexit", which could leave its car exports facing tariffs of 10 percent, Nissan warned that it could halt new investment without a guarantee of compensation for any costs related to Brexit.

A hard Brexit is the scenario in which Britain leaves the EU's single market in order to impose controls on immigration, disrupting access to the country's main trading partner.

SMMT Chief Executive Mike Hawes welcomed the rise in exports, which offset a 10.6 percent drop in domestic demand, but warned that continued success was dependent on unfettered access to key markets.

"Future growth will depend on securing our international competitiveness and the barrier-free access to major global markets that has enabled UK Automotive to thrive," he said.

(Editing by Alexander Smith)

By Costas Pitas