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Falling exports and the winding down of production of older car models saw UK vehicle manufacturing fall by almost 12 per cent last year, in the worst annual drop since the Covid-19 pandemic.
Car production at British plants fell back below 1mn vehicles, hitting 905,233 models, figures from the Society of Motor Manufacturers and Traders released on Thursday showed.
The decline came on the back of weaker exports to Europe as carmakers wrestled with slowing sales of electric vehicles in key markets such as Germany and France.
Nissan and Jaguar Land Rover — the UK’s two largest carmakers — also halted production of several models such as the Leaf EV and the Jaguar XE as they prepared to launch a new range of EVs.
“Amid significant geopolitical and trade tensions, UK manufacturers are set on turning billions of pounds of investment into production reality,” Mike Hawes, chief executive of the SMMT said. “Growing pains are inevitable.”
The production of EVs and plug-in hybrids last year fell by 20.4 per cent, but still accounted for just over a third of all vehicles produced. The SMMT said this dip was temporary, pointing to £23.4bn of new investments announced over the past two years to retool the plants for the electric shift.
Some industry executives have described the UK market as “a safe haven”, with the EU and the US imposing higher tariffs against imports of Chinese electric vehicles.
Exports to the EU fell 24.3 per cent and China exports dropped 21.8 per cent while those to the US rose 38.5 per cent.
But the UK has faced its own challenges as carmakers have struggled to meet the country’s tough EV sales targets.
Stellantis last year said the costs of complying with the government’s “zero emission vehicle mandate” was partly behind its decision to close its Luton van factory, putting 1,100 jobs at risk.
Ford also blamed the mandate as it cut 800 UK roles last year in a wider European restructuring, while Nissan warned jobs at its Sunderland plant, the largest in Britain, could be at risk unless the government relaxes its rules.
The scheme requires a certain percentage of each carmakers’ annual sales to be zero emission vehicles, with the percentage annually rising from 28 per cent this year to 80 per cent in 2030. Companies face fines of £15,000 for each missed vehicle.
UK car production peaked at more than 1.6mn before the Brexit vote in 2016 and British plants are now capable of producing 1.1mn vehicles annually after the closure of Honda’s Swindon plant and JLR said it would cease producing vehicles in Castle Bromwich, Solihull.
