Vehicle production rises but regulatory and competitive pressures threaten recovery
UK vehicle production rose by 36.3% to 74,031 units in September, according to figures published today by the Society of Motor Manufacturers and Traders (SMMT). The growth – the strongest since August 2022 – reflects the impact of an unprecedented cyber incident last year, which saw production stoppages at Britain’s biggest automotive employer.
As a result, car production increased by 38.6%, with 70,831 units rolling off factory lines, making it the strongest September for UK car manufacturing since 2023. Electrified models supported growth, with their output up 22.5% to account for more than two-fifths (42.3%) of cars produced in the month and 70.1% of exports. Exports continued to account for more than three quarters of overall output, with 76.7% of all cars built destined for international markets.
Exports to the UK’s three biggest automotive markets rose significantly in the month, led by China, where shipments increased by 357.7%, albeit from a low base, to take a 4.4% share. The US recorded a similarly substantial rise of 234.8%, accounting for 16.8% of the total, while the EU remained the largest global destination, taking 57.5%, with volumes up 12.7% year on year.
Commercial vehicle (CV) exports also grew in the month, up 1.6%, although a -2.6% drop in output for the domestic market left overall production down by -0.9%. Year-to-date performance remains down by -46.7% following structural changes within the sector.
Overall, UK factories built 564,537 cars and CVs in the first nine months, a year on year decline of -3.0%. The latest independent outlook anticipates full-year output of light vehicles at 731,000 units, down -2.3% on 2025 and below the mid-year view amid ongoing model changeovers. Output is forecast to recover to 752,000 units in 2027 as new models, mostly electric, enter production.
That recovery, however, is at risk from three major threats to the UK’s competitiveness, the first two originating in our relationship with Europe. The European Commission’s ‘Made in EU’ proposals will, as drafted, effectively exclude UK-built vehicles from their largest market. Secondly, tougher rules of origin arising under the Trade Cooperation Agreement – the ‘Brexit deal’ – will, from 2027, risk the imposition of a shared annual £1.4bn tariff bill on EV trade in both directions. Both of these measures will damage the industry on both sides of the Channel, so the forthcoming EU-UK Summit is a vital opportunity to agree pragmatic solutions and safeguard an €80bn trading relationship.
The third significant and immediate threat originates at home, where manufacturers remain under acute pressure from unrealistic EV sales targets that are eroding profitability, diverting resources and undermining the attractiveness of the UK as a place to invest. The industry has backed the transition to electric vehicles in the UK with at least £14.3bn committed in new EV plants and models since 2020. It is also investing billions more in discounts and other incentives to sell them – resources better directed towards new products, manufacturing competitiveness and cyber security, which last year’s events and more recent disruption have brought into sharp focus.
With 188,000 British jobs and an annual £18bn economic contribution directly dependent on the sector, the ZEV Mandate review must realign the EV trajectory to government’s industrial and growth ambitions. Meaningful reform of the mandate will deliver reindustrialisation as well as decarbonisation.
Mike Hawes, SMMT chief executive, said, “September’s rebound is welcome, but comparison with last year’s disruption masks the pressures on UK manufacturing. Protectionism is becoming a feature of global trade, and that threatens not just UK automotive as an export-led sector, but the health of industries overseas as well. Pragmatic discussions with trade partners are required but government can immediately help the industry with an urgent conclusion to the ZEV Mandate review. Mandate targets are running ahead of demand and draining resources required for British factories and jobs. Substantive changes – not marginal adjustments – are needed to ensure decarbonisation does not come at the cost of reindustrialisation.”
