What's Happening?
UK vehicle production experienced a significant decline in 2025, with a 15.5% drop in total output, according to the Society of Motor Manufacturers and Traders (SMMT). The decline was driven by a cyber
incident, restructuring efforts, and trade uncertainties, including US tariffs. Car production fell by 8.0%, while commercial vehicle volumes plummeted by 62.3%. Despite these challenges, electrified vehicle production saw growth, with a record 298,813 units produced, representing 41.7% of all car production.
Why It's Important?
The decline in UK vehicle production highlights the vulnerabilities of the automotive sector to external disruptions and trade policies. The industry's performance is critical to the UK economy, impacting jobs, exports, and technological advancements. The growth in electrified vehicle production suggests a shift towards sustainable transportation, aligning with global decarbonization goals. The industry's ability to recover and adapt will be crucial for maintaining its competitive edge and supporting economic growth.
What's Next?
The SMMT anticipates a recovery in 2026, with potential growth in car production and new model launches. The industry's recovery will depend on favorable policy environments, including reduced energy costs and the avoidance of new trade barriers. The UK government has outlined strategies to support the sector, and 2026 will be a critical year for implementing these plans. Stakeholders will be monitoring the industry's progress and the impact of new policies on its competitiveness and sustainability.
