SMMT: UK vehicle production hit 73-year low in 2025

UK vehicle production tumbled 15.5% to 764,715 units during 2025, the lowest output since 1952 according to data released 29 January by the Society of Motor Manufacturers and Traders (SMMT). Passenger vehicle production fell 8% to 717,371 units—the worst performance since 1956—whilst commercial vehicle output crashed 62.3% to 47,344 units as structural challenges, tariff barriers and a devastating cyberattack at Jaguar Land Rover put a bottleneck on industry capacity.

The severe decline stems primarily from a September ransomware attack that halted production at JLR for six weeks, costing the country’s largest automotive employer in the hundreds of millions of pounds and forcing its output down 21.7% year-on-year to 201,283 vehicles. On the commercial vehicle side, Stellantis shuttering its Vauxhall van facility in Luton back in April was the driver of decline. In 2025, the automaker produced just 31,000 commercial vehicles compared to 105,000 units in 2024. In a statement, SMMT Chief Executive Mike Hawes characterised 2025 as “the toughest year in a generation for UK vehicle manufacturing”.

Export markets deteriorated across all major destinations, with shipments to the US dropping by a hefty 18.3%, China falling 12.5% and Europe slipping 3.3% as tariff uncertainty and weakening demand reduced volumes. Europe received 56.7% of exported vehicles, whilst the US captured 15% and China 6.3%, with Turkey and Japan rounding out the top five destinations. Car exports declined 7.9% to 555,826 units, accounting for 77.5% of total production as the domestic market absorbed just 161,545 locally-produced vehicles.

Meanwhile, the UK government is attempting to resuscitate UK vehicle production, targeting a rise to 1.3 million units produced annually by 2035. To address the uncompetitive energy prices—the highest in Europe—that are stymieing efforts to incentivise automakers, the government is working to ensure the automotive industry benefits from cheaper, zero-carbon electricity by 2030. 

Another key part of the Labour government’s plan involves using a £1.5bn (US$2.1bn) National Wealth Fund to partially finance new battery gigafactories, giving them priority planning permission to speed up development and establish a local electric vehicle supply chain. On the consumer side, incentives for purchasing vehicles that meet emissions standards—and in most cases, are locally produced—have also been reintroduced.

December manufacturing figures signalled a potential recovery in 2026, with car production rising 17.7% to 53,003 units, ending four consecutive months of decline, whilst battery-electric, plug-in hybrid and hybrid production jumped 8.3% to a record 298,813 units representing 41.7% of total UK output. Now, SMMT forecasts overall car production will increase more than 10% to approximately 790,000 units during 2026, with potential to reach one million by 2027 provided seven planned EV model launches proceed and competitive conditions improve. 

Achieving government targets of 1.3m annual units by 2035 would likely require a new plant from a Chinese manufacturer, according to Hawes. Reports have circulated that JLR and Chery—already joint venture partners in China—are considering working together, the latter using excess capacity at the former’s UK plants to manufacture its own vehicles. 

SMMT also revealed that suppliers are now exploring diversification into defence manufacturing following government commitments to increase military spending, with companies assessing whether their capabilities in vehicle manufacturing could translate to producing equipment including drones. The sector faces additional pressure from EU proposals for “made in Europe” quotas potentially requiring 70% of cars sold in the bloc to be manufactured domestically, which Hawes warned could “deliver what Brexit didn’t deliver” by restricting UK market access. 

For traditional vehicle production, however, Hawes sees a future that hinges on electrification and government policies being delivered on. “The launch of a raft of new, increasingly electric, models and an improving economic outlook in key markets augur well,” he noted. “The key to long term growth, however, is the creation of the right competitive conditions for investment; reduced energy costs; the avoidance of new trade barriers; and a healthy, sustainable domestic market. Government has set out how it will back the sector with its Industrial and Trade strategies, and 2026 must be a year of delivery.”