Vehicle production drops in first half of year
British car manufacturers produced considerably fewer vehicles in the first six months of this year, according to fresh figures from the industry’s largest trade group which warned that tariffs and domestic policy decisions were weighing on an already struggling sector.
Vehicle production fell by 7.5 per cent between January and July compared to the same period last year in what has been a “challenging” half for carmakers, the Society of Motor Manufacturers and Traders (SMMT) said. But the lobby group added that vehicle numbers in the first and second quarter were flat, with June production up slightly on the previous month.
“We’re kind of hoping we’re at the nadir,” chief executive Mike Hawes told reporters, adding: “Global vehicle production remains under intense pressure, and the UK is no exception. Global market weakness, trade pressures and uncompetitive costs are taking their toll.”
Some 31,000 fewer vehicles rolled off production lines in the first six months of 2026 than the same period the previous year, taking the total production down to 385,979.
The drop was particularly pronounced among cars destined for the UK’s home market. Domestic output fell some 13 per cent year on year, while export production was down 5.6 per cent over the first half. Exports picked up in the second quarter, rising 3.9 per cent on the first three months of 2026, the trade body said.
Vehicle output threatened by tariffs
More than three out of four cars built in the UK are exported. The majority are sent to Europe, while the US remains the UK’s second-largest market despite Donald Trump’s tariffs weighing on trade volumes.
The SMMT said the figures laid bare the need for urgent action on a slew of headwinds coming down the track for the industry, including the UK’s sky-high industrial energy prices and the government’s ambitious rules to boost electric vehicle production.
The so-called zero-emissions vehicle mandate forces automakers to sell a growing proportion of electric cars each year. Currently, roughly 34 per cent of cars sold in Britain must be emissions-free, with the figure set to rise to 38 per cent next year. Under the current framework, all combustion engine and hybrid cars must be phased out entirely by 2035, in what is one of the strictest EV strategies in the western world.
After a flurry of industry warnings, Keir Starmer was poised to water down the rules before standing down as Prime Minister, according to a report in The Sunday Times. But his successor Andy Burnham and business secretary Jonathan Reynolds are yet to lay out their plans for the mandate.
The SMMT warned on Thursday that reform to the policy was “vital”, adding: “Regulation remains ahead of demand, making the cost of selling in the UK untenable and undermining any case for local manufacturing investment.”
The lobby group said a pair of protectionist measures being introduced by the European Union – so-called rules of origin and ‘Made in Europe’ provisions – also risk undercutting UK exporters.
“Urgent action on energy costs, reform of market regulation and improved trading arrangements with our global partners would ensure the sector can return to growth,” Hawes said. “And given that growth would be across every region in the UK, there is every reason for the new government to get behind the sector.”