UK vehicle production rebounds but industry warns of threats to recovery

UK vehicle production increased by 36.3% in September 2026, reaching 74,031 units, although the Society of Motor Manufacturers and Traders (SMMT) has warned that regulatory and trade pressures could threaten the industry’s recovery.

The latest figures show the strongest monthly growth since August 2022, although the increase largely reflects the impact of a major cyber incident in September 2025, which disrupted production at Britain’s largest automotive employer.

Car manufacturing rose by 38.6% to 70,831 units, marking the strongest September output since 2023.

Electrified vehicles continued to support production, with output increasing by 22.5% and accounting for 42.3% of cars manufactured during the month. Electrified models also represented 70.1% of car exports.

Exports remained central to UK automotive manufacturing, with 76.7% of cars produced destined for overseas markets.

The European Union remained the largest export destination, accounting for 57.5% of shipments, with volumes rising by 12.7%. Exports to the US increased by 234.8%, while shipments to China rose by 357.7%, although from a relatively low base.

Commercial vehicle production declined marginally by 0.9%, while year-to-date output remained 46.7% below the corresponding period in 2025, reflecting structural changes within the sector.

Despite September’s improvement, overall UK vehicle production remains below last year’s levels. Factories manufactured 564,537 cars and commercial vehicles during the first nine months of 2026, a decline of 3%.

The latest industry outlook forecasts full-year light vehicle production of 731,000 units, down 2.3% on 2025, before recovering to 752,000 units in 2027 as new models, predominantly electric vehicles, enter production.

However, the SMMT has identified three major threats to this recovery: proposed European Union local-content requirements, tighter rules of origin for electric vehicle trade from 2027, and the UK’s Zero Emission Vehicle (ZEV) Mandate.

The organisation warns that the European Commission’s proposed ‘Made in EU’ measures could restrict access for UK-built vehicles to their largest export market.

Meanwhile, changes to rules of origin under the UK-EU Trade and Cooperation Agreement could result in a combined annual tariff burden of £1.4bn on electric vehicle trade between the UK and EU.

The SMMT is calling for pragmatic solutions ahead of the forthcoming UK-EU Summit to protect the automotive trading relationship.

The industry body is also urging the UK government to make significant changes to the ZEV Mandate, arguing that electric vehicle sales targets are running ahead of consumer demand and placing additional financial pressure on manufacturers.

According to the SMMT, manufacturers have committed at least £14.3bn to new UK electric vehicle plants and models since 2020, while also investing heavily in consumer incentives to support EV sales.

“Protectionism is becoming a feature of global trade, and that threatens not just UK automotive as an export-led sector, but the health of industries overseas as well.

“Pragmatic discussions with trade partners are required but Government can immediately help the industry with an urgent conclusion to the ZEV Mandate review. Mandate targets are running ahead of demand and draining resources required for British factories and jobs.

“Substantive changes – not marginal adjustments – are needed to ensure decarbonisation does not come at the cost of reindustrialisation.”

With 188,000 jobs and an annual £18bn economic contribution directly dependent on UK automotive manufacturing, the SMMT argues that greater regulatory flexibility and improved trading conditions will be essential to sustaining investment, employment and the transition to electric vehicles.