The UK automotive sector experienced a significant downturn in 2025, with vehicle production dropping by 15% year-on-year, according to a new report from the Society of Motor Manufacturers and Traders (SMMT). A total of 717,371 cars and 47,344 commercial vehicles were produced, highlighting the myriad challenges the industry faced, including a cyber attack, new trade tariffs, and ongoing shifts towards sustainable manufacturing practices.
A Year of Decline
The SMMT’s report paints a stark picture of the UK’s automotive landscape as it grapples with some of the most challenging conditions in decades. The production of cars intended for the domestic market and exports alike saw an 8% decline. Commercial vehicle output suffered even more dramatically, plummeting by 62% as manufacturers navigated a complex environment of structural changes and workforce adjustments.
One of the most notable incidents impacting production was a cyber attack that halted operations at Jaguar Land Rover (JLR), one of the UK’s key manufacturers. This incident, coupled with new tariffs affecting transatlantic trade, has severely constrained output. The industry’s transition towards decarbonisation has also contributed to these challenges, as plants adapt to meet stricter environmental standards.
Electric Vehicle Production on the Rise
Despite the overall decline, there was a silver lining in the production figures. The output of battery electric vehicles (BEVs), plug-in hybrids, and hybrid cars surged by 8.3%, reaching nearly 300,000 units. This marks a record 41.7% share of total vehicle production, signalling a pivotal shift towards electrification in the sector. The anticipated launch of seven new electric vehicle models in the coming year is expected to boost production further.
Mike Hawes, chief executive of SMMT, expressed cautious optimism about the future. “2025 was the toughest year in a generation for UK vehicle manufacturing,” he stated, noting that the combination of structural challenges and new trade barriers has constrained output. However, he believes the outlook for 2026 is promising with the expected introduction of new electric models and an improving economic climate in key markets.
Export Markets and Future Prospects
In terms of exports, Europe remained the primary market for UK-produced vehicles, accounting for 56% of total exports, followed by the United States at 15%, and China with 6.3%. The SMMT anticipates a recovery in production this year, projecting an increase of more than 10% as manufacturers adapt to the evolving landscape and consumer preferences shift further towards electric vehicles.
Hawes emphasised the need for a conducive environment for long-term growth. “The key to long-term growth, however, is the creation of the right competitive conditions for investment, reduced energy costs, and the avoidance of new trade barriers,” he said. He called for 2026 to be a year of action, as the government outlines its strategies to support the automotive sector.
Why it Matters
The decline in UK vehicle production underscores the pressing challenges facing the automotive industry, which must navigate a rapidly changing landscape defined by technological advancements and environmental regulations. As the sector pivots towards electric mobility, the ability to adapt and innovate will be crucial for sustaining growth and maintaining the UK’s position as a key player in the global automotive market. The government’s role in fostering a supportive environment will be pivotal in ensuring that the industry not only recovers but thrives in the years to come.
