UK vehicle output down 15.5% in 2025

UK vehicle production suffered its steepest decline in a generation in 2025, falling 15.5% to 764,715 cars and commercial vehicles, according to the Society of Motor Manufacturers and Traders (SMMT).

Car output dropped 8.0% to 717,371 units while commercial vehicle production plunged 62.3% to 47,344 as manufacturers restructured operations, faced new trade frictions and dealt with a cyber incident that halted output at a major plant.

Exports remained crucial, accounting for more than three quarters of car production, though shipments to key markets including Europe, the US and China all declined by -3.3%, -18.3% and -12.5% respectively – with shipments to the US impacted by tariff uncertainty earlier in 2025.

December offered a glimmer of recovery, however, with car production up 17.7% year on year to 53,003 units after four months of decline.

Despite the overall downturn, electrified vehicles continued to gain ground. Production of battery electric, plug-in hybrid and hybrid cars rose 8.3% to a record 298,813 units, representing 41.7% of all cars built.

That momentum is expected to strengthen. With next-generation high-volume EV production beginning in Sunderland and seven new electric models due to enter UK production, independent forecasts point to a recovery in 2026. Car output is projected to grow by more than 10% to around 790,000 units, with total light vehicle production potentially reaching 824,000 and, under favourable conditions, one million units by 2027.

Realising that potential will depend heavily on policy support, the industry says. Billions of pounds of public and private investment have already been committed to the EV transition, including government backing through its DRIVE35 programme under the Modern Industrial Strategy. But manufacturers argue further action is needed to cut energy costs, strengthen the domestic supply chain and stimulate UK demand.

Trade policy will also be critical for what is an export-led sector. Ensuring tariff-free access to European markets and clarity over post-Brexit rules of origin will be vital, especially as more protectionist proposals emerge from the European Commission. At the same time, industry leaders want stability in transatlantic trade and swift progress in implementing new agreements with key Asian partners.

Quoting the new figures, SMMT chief executive Mike Hawes said 2025 had been “the toughest year in a generation” but insisted the outlook was improving.

“The launch of a raft of new, increasingly electric, models and an improving economic outlook in key markets augur well,” he said. “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. Government has set out how it will back the sector with its Industrial and Trade strategies, and 2026 must be a year of delivery.”