Insights

In 2025, the automotive industry in the UK experienced a significant decline in car production, marking the fifth consecutive month of reduced output. The Society of Motor Manufacturers and Traders (SMMT) reported that production figures fell by a third compared to the previous year, resulting in the lowest output since 1949, excluding the exceptional circumstances of 2020 caused by the Covid pandemic. By May 2025, the total number of vehicles produced had reached just 348,226 units, the lowest number since 1953. Several factors contributed to this decline. Ongoing model changeovers and restructuring of the industry were significant issues affecting production rates. Moreover, the adverse impact of US tariffs on imported vehicles further complicated the situation for UK manufacturers. The SMMT highlighted that car production for export plunged, especially to the UK’s largest markets, the EU and the US. This decline included a 27.8% drop in car production destined for export markets, with shipments to the EU down by 22.5% and even more drastically to the US, which fell by 55.4%. Despite these challenges, there are signs of renewed optimism within the sector. Industry leaders believe that targeted actions, such as addressing rising energy costs and enhancing access to international markets, could position the UK to reclaim its status as one of the top 15 automotive manufacturing nations. Mike Hawes, Chief Executive of the SMMT, indicated that confirmed trade agreements with key markets, particularly the US, and an improving relationship with the EU could facilitate recovery. The UK government's involvement in formulating strategies to bolster the automotive industry is seen as critical to ensuring its growth and environmental goals. In related news, the future of the UK's automotive sector was also put under scrutiny due to reports suggesting that Lotus, currently owned by the Chinese multinational Geely, was contemplating shutting down its manufacturing plant in Hethel, Norfolk. This decision could potentially jeopardize approximately 1,300 jobs. However, Lotus released a statement asserting its commitment to maintaining operations in the UK and emphasized its long history and investment in the local economy. The Business Secretary plans to meet with Lotus to discuss these concerns further, underscoring the government’s vested interest in the continuation of car manufacturing within the UK.