UK vehicle manufacturing remains subdued as global demand weakens
Commenting on the latest SMMT UK vehicle manufacturing data, Emily Sawicz, Director and Industrials Senior Analyst at RSM UK, said:
“UK output continues to be weighed down by the loss of commercial vehicle capacity. Globally, automotive production is expected to decline by around 2% in 2026 and, with much of the remaining growth concentrated in Chinese manufacturers, the outlook for those in the UK and Europe is likely to be even more challenging.
“The pressures are clear across the sector. Recent results from major UK manufacturers reflect the combined strain of tariffs, rising costs and, in some cases, cyber disruption, all of which are squeezing the ability to turn a profit. The luxury vehicles that have long been a UK strength are increasingly losing ground in China as domestic alternatives take hold, removing what was once a vital export market.
“There are, however, some grounds for cautious optimism. Potential inclusion in the EU’s “Made in Europe” subsidies, plus a proposed trade deal with the Gulf Cooperation Council, worth around £3.7bn and covering cars among other goods, could help reduce tariffs and open up new demand to partially replace lost luxury sales, though supply chain and export logistics remain a hurdle. The government's recently signed agreement with Wayve also signals welcome policy support for self-driving technology and continued investment in the UK's automotive transition.
“Perhaps most interesting is the opportunity to turn the UK's tariff position to its advantage. With a more favourable rates in place, there is a real case for manufacturers, including brands such as Lotus, to produce here and sell into key markets rather than exporting from China. Lotus has indicated openness to building hybrid models such as the Emira and the new Type 135 supercar in the UK, subject to government support.
“The UK has the factory capacity, the skilled workforce and the heritage in automotive production. If that potential can be unlocked, it could offer a much-needed route to long-term growth at a time when the wider market remains fragile.”