The British automotive industry is at a critical juncture, with forecasts suggesting that the ambitious target of producing 1.3 million vehicles annually by 2035 is increasingly out of reach unless significant new manufacturing capacity is established. As Labour leader Keir Starmer embarks on a high-profile trade mission to China, industry experts are expressing skepticism regarding the feasibility of doubling production from the 764,715 vehicles recorded in 2025.
Declining Production and Growing Challenges
The Society of Motor Manufacturers and Traders (SMMT) has revealed that UK vehicle production plummeted by 15.5% in 2025, marking the lowest output since 1952, barring the disruptions caused by the Covid-19 pandemic. The decline has been attributed to a combination of factors, including punitive US trade tariffs, operational difficulties at major manufacturers such as Nissan, and a crippling cyber-attack that significantly hindered operations at Jaguar Land Rover (JLR) during the latter part of the year.
Mike Hawes, the chief executive of the SMMT, articulated the gravity of the situation by declaring 2025 “the toughest year in a generation” for the industry. With the clock ticking on Labour’s ambitious plans, he stated that achieving the target of 1.3 million vehicles necessitates not only retaining existing production but also attracting new investments to build additional factories.
Starmer’s Trade Delegation: A Ray of Hope?
As Keir Starmer leads a delegation to China, which includes representatives from JLR, McLaren, and Octopus Energy, the hope is that this trip will catalyse fresh investment into the UK automotive sector. Hawes pointed out that Chinese manufacturers are currently the most likely candidates to establish new electric vehicle assembly plants in Britain. The dialogue surrounding potential investments is ongoing, and Hawes remains optimistic about the future, particularly in light of the growing interest in electric vehicles, which accounted for a record 41.7% of new car production in the past year.
Amidst this backdrop, the increasing presence of Chinese brands in the UK market cannot be overlooked. In 2025, Chinese cars made up 9.7% of new car sales, nearly doubling their market share from the previous year. Brands such as MG, BYD, and Chery have aggressively expanded their footprint in the UK, capitalising on the absence of import tariffs that are otherwise prevalent in the US and EU markets. Chery has signalled its intent to explore the possibility of establishing a plant in the UK as part of a localisation strategy.
The Need for Local Investment
Hawes emphasised the importance of local production capabilities, particularly in a world marked by volatility. He argued that proximity to market reduces risks and enhances business certainty. The call for investment in new models is urgent, especially as the industry seeks to attract emerging players, predominantly from China.
“If you are going to grow the industry, we need investment in new models here,” Hawes stated, underscoring the pivotal role that Chinese carmakers may play in revitalising the UK automotive landscape.
Why it Matters
The future of the UK automotive industry hinges on strategic investments and the ability to adapt to an evolving market landscape. With the stakes higher than ever, the successful navigation of these challenges not only impacts the economy but also the thousands of jobs that depend on a thriving automotive sector. As the Labour Party seeks to champion industrial revival, the outcomes of Starmer’s discussions in China may prove crucial in determining the trajectory of Britain’s automotive ambitions for decades to come.
