UK vehicle production falls 7.5% to 385,979 units in first half

UK vehicle production fell 7.5 per cent in the first half of 2026, with factories building 385,979 cars and commercial vehicles, according to figures published today by the Society of Motor Manufacturers and Traders.

Output stabilised in the second quarter, dipping by 128 units, or 0.1 per cent, year on year, as exports strengthened and car production returned to marginal growth.

Production for export reached 294,222 units over the six months, down 5.6 per cent on the same period last year. Output for the domestic market fell 13.2 per cent to 91,757 units. In the second quarter, exports rose by 5,075 units, or 3.9 per cent.

Car exports rose in June for the third consecutive month, up 4.5 per cent, while commercial vehicle exports rose 54.3 per cent, which SMMT said came from a weak base. Total June output eased 1.2 per cent to 68,200 units, following a rise in May.

Exports accounted for 76.2 per cent of all vehicles built in the year to date, which SMMT said underlined the importance of free and fair trade with global markets. The EU remained the sector’s biggest customer and supplier, taking 58.3 per cent of car shipments, up 3.4 per cent year on year to 166,801 units. The US was second with 45,162 units, or 15.8 per cent of exports, although volumes fell 4.6 per cent. China, the third biggest market, took 12,323 units, down 44.7 per cent on the first half of 2025.

Model changes at several manufacturers continue to affect volumes, particularly for electrified cars, SMMT said. Those vehicles accounted for around four in 10 cars built in the first half, with output 8.6 per cent behind last year.

Citing product transitions and trade and investment uncertainty, the latest independent production outlook anticipates total UK car and light vehicle output will be broadly flat this year at 740,000 units, before returning to growth in 2027. SMMT said the potential to pass one million units still exists, but would require output to grow by some 40 per cent and depends on securing further new model investment by making the UK more globally competitive for manufacturing.

With major investment decisions being taken now and a new government in place, SMMT is urging rapid implementation of the Modern Industrial Strategy. It said that, given energy price volatility, the UK’s uncompetitive industrial electricity prices must be addressed even after the introduction of the British Industrial Competitiveness Scheme, which cuts electricity costs for eligible electricity-intensive manufacturers from April 2027.

The trade body also said reform of the ZEV Mandate is vital. Manufacturers are investing billions in zero emission technologies, SMMT said, but regulation remains ahead of demand, making the cost of selling in the UK untenable and undermining any case for local manufacturing investment.

On trade, SMMT said ‘Made in Europe’ and rules of origin issues arising under the UK-EU Trade and Cooperation Agreement threaten cross-Channel trade and supply chains. Left unresolved, it said, they threaten an €80 billion-a-year trading relationship as well as Europe and the UK’s wider automotive competitiveness.

Mike Hawes, SMMT chief executive, said: “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. But decline is not inevitable. 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. 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.”

According to SMMT, automotive manufacturing turns over more than £85 billion, adds £18 billion in gross value added and employs 188,000 people. Across the wider sector, including retail and service, maintenance and repair, automotive is worth nearly £400 billion, contributes more than £75 billion in GVA and supports 830,000 jobs. It accounts for 10 per cent of all UK goods exports, worth almost £40 billion, and £111 billion in total automotive trade. SMMT analysis identifies a further £4.6 billion domestic sourcing opportunity by 2030.