Sharp drop in UK car production amid export and EV slump
Commenting on the latest SMMT UK vehicle manufacturing data, Emily Sawicz, Director and Industrials Senior Analyst at RSM UK, said:
“UK vehicle production saw a sharp contraction in January as factories struggled against weak global demand, with total output falling 13.6% to 67,415 units. Car manufacturing declined 8.2% to 65,249 units, while commercial vehicle volumes dropped a steep 68.6% to 2,166 units, marking the tenth consecutive month of CV decline following major plant restructuring. The downturn was driven largely by slumping exports even as the EU remained the UK’s largest overseas market. Overall, the figures reflect a challenging start to the year for the sector and a slower rebound to the expected 2026 growth.
“There are concerns across the industry that the UK’s Zero Emissions Vehicle mandates are hampering growth. Increasing global competition and insufficient levels of demand are dampening manufacturers’ ability to invest fully in electric models and meet the mandates - as evidenced by Vauxhall relaunching their diesel cars in the UK. This is at a time when the target deadline creeps closer, ramping up pressure on manufacturers.
“Whilst activity pipeline for 2026 looks positive, facilitating long-term market growth is key for allowing the sector to thrive. Diversification, such as ongoing discussions with Chinese car makers to build their vehicles in UK facilities, could offer a potential boost to domestic production, as manufacturers look to new approaches to reach the ambitious targets.”
She added: “The government has two options, it either doubles down on EV manufacturing - stimulating demand with incentives - or it softens its approach and accepts a slower transition.”