UK Car Production Plunges 15.5% in 2025, Marking Worst Year in Decades
The British motor industry has endured what experts describe as its most challenging year in a generation, with official figures revealing a dramatic 15.5 per cent slump in vehicle production during 2025. According to a comprehensive new report from the Society of Motor Manufacturers and Traders (SMMT), total output fell to just 764,715 cars and commercial vehicles, representing the steepest annual decline witnessed in recent memory.
Multiple Factors Behind the Sharp Decline
Mike Hawes, chief executive of the SMMT, characterised 2025 as an exceptionally "tough" period for the sector. The sharp contraction has been attributed to a confluence of significant adverse events that severely impacted manufacturing capacity and market confidence. Key contributing factors included:
- The permanent closure of the Stellantis Vauxhall van factory located in Luton
- A debilitating cyber attack on Jaguar Land Rover (JLR) that forced production halts for several weeks
- Trade tariffs imposed by the United States administration under President Trump
- Industry-wide preparations and disruptions associated with transitioning to new electric vehicle (EV) model production lines
The downturn proved so substantial that it negatively affected the United Kingdom's overall Gross Domestic Product figures. In response, the government committed approximately £1.5 billion in support for the JLR supply chain to safeguard thousands of automotive jobs across the country.
Export Markets and Geographic Distribution
European markets remained the primary destination for British-built vehicles, receiving 56.7 per cent of total exports. The United States followed as the second-largest export market at 15 per cent, though shipments were hampered by tariff uncertainties throughout the year. China accounted for 6.3 per cent of exports, with Turkey and Japan completing the top five global markets for UK automotive exports.
Additional significant export destinations included Canada, Australia, South Korea, Switzerland, and the United Arab Emirates. Notably, exports to all major markets experienced declines during 2025, reflecting the broader challenges facing the industry.
Signs of Recovery and Electric Vehicle Momentum
Despite the overall gloomy picture, production showed encouraging signs of recovery towards the end of the year as operations normalised at Jaguar Land Rover facilities. Furthermore, the new generation electric Nissan Leaf began rolling off production lines at the Sunderland plant, marking a significant milestone for British EV manufacturing.
Mr Hawes expressed "optimistic" sentiments about the industry's prospects, with independent forecasters projecting a recovery in 2026 that could see total vehicle production increase to approximately 824,000 units. This anticipated improvement will be driven substantially by new electrified models from Jaguar and continued production of the electric Nissan Leaf.
Record Electric Vehicle Production Share
In a bright spot amidst the broader decline, production of electrified vehicles achieved record levels. Combined output of battery electric (BEV), plug-in hybrid (PHEV), and hybrid (HEV) vehicles increased by 8.3 per cent to reach 298,813 units. This represented a remarkable 41.7 per cent share of total production—the highest proportion ever recorded in the UK automotive sector.
With the commencement of next-generation volume electric car production in Sunderland and plans for seven new EV model launches across UK facilities, output is expected to strengthen significantly throughout 2026.
Long-Term Growth Pathway and Policy Requirements
Looking beyond immediate recovery, Mr Hawes outlined a potential "pathway" for UK vehicle production to reach one million units in coming years, with possibilities extending to 1.3 million units should new market entrants—potentially Chinese manufacturers—establish British production facilities. However, industry leaders emphasise that a stable and robust domestic market remains essential for attracting such inward investment.
The automotive sector also requires qualification for reduced energy costs under the British Industrial Competitiveness Scheme to enhance competitiveness. Additionally, the SMMT has called for modifications to the EV mandate, which imposed approximately £5 billion in penalties on manufacturers during 2025 alone for failing to meet electric vehicle sales targets—a situation described as "unsustainable" for the industry.
Mr Hawes summarised: "Structural changes, new trade barriers, and a cyber attack that stopped production at one of the UK's most important manufacturers combined to constrain output, but the outlook for 2026 is one of recovery. The launch of a raft of new, increasingly electric models and an improving economic outlook in key markets augur well."
He further emphasised that "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." The government has outlined industrial and trade strategies to support the sector, with 2026 representing a critical year for implementation and delivery of these commitments.
