Turnover hit an all-time high of £69.5bn last year, while almost 1.6m vehicles were built.
On current trends, the figure will rise to almost two million in the next two years, said the Society of Motor Manufacturers and Traders (SMMT).
Investment in more efficient manufacturing processes has led to big gains in productivity, with an average of 11.5 vehicles built per employee in each of the last five years, two more than in the previous five years.
The industry has also reduced its environmental impact, with waste to landfill from all automotive production falling by over a quarter last year, and 92 per cent since 2000.
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Water and energy use both fell by over 10 per cent, while the number of workplace incidents has fallen to an all-time low of 2.2 per 1,000 employees.
Mike Hawes, SMMT chief executive, said, “The UK automotive industry can be proud of its achievements as it continues to set new standards.
“The sector is delivering growth in volumes, turnover and employment, while reducing its environmental impact.
“Continuing to expand in a fiercely competitive global market is a major challenge and will depend on a supportive economic and regulatory environment which promotes investment to foster innovation and continuing productivity improvements.”
The number of people employed in automotive manufacturing and retail increased by 27,000 last year to almost 800,000, with the average worker responsible for generating £440,000 in turnover, said the SMMT.
The value of exports increased to £34.6bn last year, helping the industry contribute £15.5bn to the British economy.
The SMMT promotes the interests of the UK automotive industry at home and abroad.