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Last year saw British production of cars, vans, trucks, and buses fall to the lowest point since 1952, according to data from the Society of Motor Manufacturers and Traders (SMMT). The industry faced numerous challenges, resulting in a significant drop in output. Mike Hawes, the SMMT’s chief executive, described the past year as “the toughest year in a generation,” highlighting the impact of a major cyberattack on Jaguar Land Rover, the closure of Vauxhall’s Luton plant, and uncertainty related to US trade policies.
Despite these setbacks, there is optimism for a recovery, with new electric vehicle models expected to drive production growth. The SMMT anticipates that car and van manufacturing could surpass one million units by 2027. Nonetheless, Hawes cautioned that emerging protectionist policies from Brussels pose a serious risk to the UK automotive sector. Last year, total vehicle production reached 764,715 units, a 15.5% decline compared to the previous year, with most of these being cars—specifically, 717,371 units manufactured, about 60,000 fewer than before.
Several one-time events contributed to the production downturn. Jaguar Land Rover experienced a debilitating cyberattack in early September which led to a shutdown of its computer systems, forcing factories to halt operations for over a month and delaying a full return to normal production. On top of this, around 78% of UK-produced cars are exported, making the sector vulnerable to trade disruptions. The announcement of increased import tariffs by the United States in April put added pressure on exports, causing some manufacturers to limit shipments to the US market. Although a later agreement reduced the threat of very high tariffs, the baseline tariff on UK vehicle exports to the US rose from 2.5% to 10%, dampening sales.
Further challenges included Nissan and Jaguar Land Rover’s decision to end production of older models to focus on new electric vehicles. Nissan began releasing the latest version of its Leaf EV from its Sunderland factory in December, while Jaguar Land Rover is preparing to launch new electric Range Rover and Jaguar models from its Solihull plant later this year. Production of commercial vehicles also plunged by 62% to just 47,344 units, mainly due to the permanent closure of Vauxhall’s Luton plant in March, with operations being consolidated at Stellantis’s Ellesmere Port facility.
Looking forward, the SMMT forecasts a 10% increase in car production this year as new models come into play. Hawes described the outlook as “optimistic but realistic,” contingent on the rollout of additional new vehicles and a revival of demand in key export markets, particularly Europe. For this growth to materialize, government measures under the Modern Industrial Strategy must be implemented, especially to reduce the country’s high energy costs. The government’s target is for the UK to produce 1.3 million vehicles annually by 2035, a goal that might require the establishment of a new factory by an overseas manufacturer, with Chinese companies seen as the most probable investors. “In terms of who is expanding their production globally, obviously it’s the Chinese,” Hawes noted.
However, the British car industry faces significant threats from evolving EU policies. Hawes voiced concerns about a “Made in Europe” approach that aims to limit government subsidies for low-emission vehicles to those built within Europe and pressures corporate fleets to prefer European-made cars. He warned, “Unless the UK can be seen as part of that, these proposals could have the effect of delivering what Brexit didn’t deliver – and that’s making it much harder for UK produced vehicles to access the European market,” calling it a “significant threat.” Additionally, new EU rules of origin set to take effect next January will require a higher proportion of vehicle parts and components to be produced within the UK or EU to maintain tariff exemptions on electric vehicles exported across borders. Currently, many EVs transported between the UK and EU fail to meet these criteria due to slower-than-expected growth in battery production capacity. Hawes expressed hope that an agreement might be reached within the year to provide manufacturers with more time to meet these requirements
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