The record figure reflects the popularity of models such as the Qashqai and the new Juke. The Sunderland factory turned out 244,298 Qashqais, 56,979 Qashqai+2s, 132,606 Jukes and 46,602 Notes last year. The Qashqai was the ninth best-selling car in the UK in the first 11 months of 2011, according to the SMMT, with some 36,826 sold.

The success was all the more notable as 2010 marked the end of Micra production, which has been shifted to India, with Sunderland shifting up market to more high-value added cars such as the Qashqai. And of particular interest, Nissan will assemble the electric Leaf model from 2013.

More generally, while we're still waiting for 2011 production figures, total UK car output for the year is expected to be up by some 6% on 2010. Output had anyway risen by some 27% the year before, in 2010, to 1.27 million units. That's very good news - although do remember that the recent boost has been off a very depressed 2009 output figure.

And let's bear in mind that output even after another good year in 2011 remains well below pre-crisis levels of around 1.65 million units in 2008. Go back to 1999 and the figure was 1.99 million.

This recent output growth has come despite stagnant sales in the UK given austerity at home, and is indicative of the underlying strength of the UK industry and its remarkable export performance, boosted by a 25% depreciation of sterling from peak to trough which - for now at least - has made the UK's exports very competitive.

And manufacturers are being boosted by rapid growth in emerging markets like China and Russia where demand for premium products like Range Rovers is rising rapidly as a new middle class is able to show its wealth.

Britain, as the world's second largest premium car producer in the world, is well placed to exploit this demand growth as long as the sterling depreciation doesn't unwind too soon.

Keeping sterling at a competitive level is critical in this regard. On that, the danger that the Bank of England might raise interest rates too early appears to have passed, and instead we have seen more QE to stimulate the economy. That has the added benefit of keeping interest sterling low - unless that is the eurozone implodes.

The key message from this?

Firstly, the UK can't compete at the low end of car assembly anymore, but can still do very well in terms of R&D, engines, premium cars, high design content vehicles like the Qashqai and the MINI at Oxford, and in new clean technologies like electric cars (witness as well Tata beginning assembly of its electric car in Coventry). As well as course in the top-end market that JLR competes in. And getting GM to bring production of its new electric car to the UK should be a high priority for the government.

Secondly, while 2012 is going to be a challenging year for the industry with austerity and stagnating economies in the UK and eurozone, the push by UK based exporters like JLR further afield (think China and India) offers hope for continued growth.

Thirdly, while everyone's been talking about 'rebalancing' the economy towards manufacturing and exports, the auto industry has just been getting on with it. Continuing to do that in the future, and maximising the benefits for the domestic economy through local sourcing, however, needs a big effort on plugging skills gaps, enabling the supply chain to get access to finance, and helping exporters.

Ignore anti-interventionists saying the state can't 'pick winners' through industrial policy. The UK's car industry is already a winner, and we need to continue backing it.

Professor David Bailey works at Coventry University Business School.