Car manufacturing in the United Kingdom has dropped to its lowest level since 1953, excluding the Covid-19 lockdown period, according to the latest industry figures.
The steep decline is being attributed to a combination of weak sales, the slow transition to electric vehicles, and recent tariffs imposed by the United States under former President Donald Trump.
Data from the Society of Motor Manufacturers and Traders (SMMT) shows that British car and van production fell by 12 percent in the first half of the year, with just 417,200 units built. Only the pandemic-affected year of 2020 recorded worse output in the last seven decades.
The downturn has hit the automotive sector hard, with SMMT Chief Executive Mike Hawes describing it as one of the most difficult periods in UK automotive history. However, he expressed hope that the industry has reached its lowest point and is now poised for gradual recovery.
Compounding the crisis, Trump’s 25 percent tariff on all vehicle imports into the US has disrupted a key export route for high-end British brands such as Bentley, Rolls-Royce, and Jaguar Land Rover.
Many of these manufacturers paused exports to the US from April, awaiting a resolution. Relief may come in the second half of 2025, thanks to a trade agreement allowing up to 100,000 UK-built vehicles to be shipped to the US annually at a reduced 10 percent tariff.
Production figures showed a 7 percent increase in June compared to the same month last year, indicating early signs of improvement. Hawes noted that the tariff quota would help stabilise export levels but warned that further growth would require new negotiations with American trade officials.
In the domestic market, British carmakers like Nissan, which is preparing to launch its new electric Leaf model at its Sunderland plant in northern England, are expected to benefit from new government subsidies. The Labour government has pledged £650 million to support the sale of electric vehicles, offering up to £3,750 per car priced below £37,000.
These subsidies, however, come with strings attached. Only vehicles produced with low carbon emissions are eligible, meaning many imported models from countries like China and South Korea are unlikely to qualify.
The lack of consultation with manufacturers before the announcement has sparked frustration within the industry. Key details of the scheme remain unclear, leaving carmakers unable to confirm eligibility or pricing, and causing uncertainty among buyers.
This confusion could also hinder manufacturers’ ability to meet zero-emission vehicle (ZEV) sales targets, as the rules may unfairly disadvantage some brands.
Expectations for the industry have been revised sharply downward. Back in 2017, the SMMT projected annual UK car production to reach 2 million units. That forecast has since been slashed, with only 755,000 vehicles now expected to be built in 2025—down from 815,000 predicted in April before the impact of the US tariffs.
The UK automotive sector now faces a critical juncture, with economic headwinds, policy uncertainty, and international trade challenges all shaping its future trajectory.
