The Society of Motor Manufacturers and Traders said almost 1.6 million cars were built in 2015, up 3.9% on 2014.
Nearly four out of five cars were exported, up by 2.7% on 2014, despite falls in sales to China and Russia.
But this was offset by economic recovery in Europe, where demand for UK-built cars increased by 11% in 2015.
SMMT chief executive Mike Hawes: "Despite export challenges in some key markets such as Russia and China, foreign demand for British-built cars has been strong, reaching record export levels in the past year.
"Europe is our biggest trading partner and the UK's membership of the European Union is vital for the automotive sector in order to secure future growth and jobs."
Production of the Mini rose by 12.4% last year to 201,000 and Toyota produced 190,000 cars, up 10.4%.
Vauxhall's production rose by 9.5% to 85,000, and Jaguar Land Rover saw a 9% rise to 489,000.
However, Nissan recorded a 4.7% reduction, to 476,000, and Honda was down by 2%, to 119,000).
Car manufacturing in the UK has hit a 10-year high, with more vehicles exported than ever before, according to the industry's trade group.