British car manufacturing enjoyed its best month in 17 years in March fuelled by demand for vehicles from abroad.

The number of cars to roll off UK production lines rose by 7.3% last month compared with a year earlier, to 170,691 - the highest number since March 2000.

Of these, 130,838 were exported, up 10.6% compared with the previous month. Demand fell at home, however, with the number of cars built for the UK market down 2.2% at 39,853, according to the figures from the Society of Motor Manufacturers and Traders (SMMT).

A strong March also helped to drive a 17-year quarterly high for UK production in the first three months of 2017, with 471,695 cars built, up 7.6%

“UK car manufacturing is accelerating thanks to billions of pounds of investment committed over the past few years,” said Mike Hawes, SMMT’s chief executive.

He warned, however, that the current momentum could be undermined should the government fail to negotiate a free trade deal between Britain and the EU during Brexit talks.

“Much of our output goes to Europe and it’s vital we maintain free trade between the UK and EU or we risk destroying this success story,” he said.

A total of 1.7m cars were produced in Britain in 2016, and the SMMT believes the number could surpass 2m by 2020, breaking the previous record of 1.92m set in 1972.

The biggest manufacturers in the UK include Japan’s Nissan in Sunderland, Indian-owned Jaguar Land Rover in the West Midlands and north-west, and German-owned Mini in Oxford.

Hawes said a large part of the work being undertaken in the UK was on developing the latest low emission diesels vehicles.

“It is essential for future growth and employment that we encourage these newer, cleaner diesels onto UK roads and avoid penalising consumers who choose diesel for its fuel efficiency and lower CO2 emissions.”