UK Car Production Declines Amid Global Challenges
In February, UK car production fell by 17% compared to the same period in 2025, marking a significant downturn that the industry described as “extremely worrying.” This decline occurred prior to the full impact of the conflict in Iran, which is expected to further affect the sector.
The Society of Motor Manufacturers and Traders (SMMT) reported that the drop in output was accompanied by a sharp decrease in exports. The industry anticipates an additional reduction in production for March, as the ongoing war and its effects continue to weaken consumer demand, presenting a dual challenge for car manufacturers.
Mike Hawes, chief executive of the SMMT, stated: “Another decline for UK vehicle production and exports is extremely worrying, given these figures pre-date the crisis in the Middle East. While the sector has made efforts to build resilience into its logistics and supply chains post-Covid, the conflict adds further strain.”
Export Market Pressures
British car manufacturers export 81% of their vehicles, with the European Union (EU) being the largest market, followed by the United States and China. Although exports to the EU increased by 5%, exports to the US decreased by 34%, and those to China fell dramatically by 66%. These declines contributed to an overall 12% reduction in exports.
The significant drop in demand from China, coupled with tariffs imposed by former US President Donald Trump, has placed considerable pressure on UK carmakers in two of their most important markets.
Electric and Hybrid Vehicle Production
Production of battery-electric, plug-in hybrid, and hybrid vehicles also declined by 3% to 26,629 units in February. Despite this decrease, these vehicles represented 40% of the total car output.
Industry Challenges and Future Outlook
Manufacturers were already facing difficulties, with UK vehicle production having declined last year, excluding the effects of Covid-19 lockdowns. This downturn contrasts sharply with the Labour Party’s goal to produce 1.3 million vehicles annually by 2035, nearly doubling the 764,715 cars and vans manufactured in 2025.
While European sales have shown more resilience, the SMMT warned earlier this month that these could also be negatively impacted if the UK is not fully included in new regulations proposed by the EU.
The Japanese automaker Nissan has announced potential production cuts at its Sunderland plant due to these proposals, which company leaders warn could harm the £70 billion annual cross-channel trade.
The Sunderland facility, the largest car factory in Britain, employs 6,000 people and has the capacity to produce 600,000 vehicles annually. However, current output remains well below this capacity due to weakened demand.
“Governments must work together to extend full, trusted partner status to the UK automotive sector to ensure choice and affordability for consumers, particularly of zero emission vehicles, on both sides of the Channel,” the SMMT said on Friday.
Industry Risks and Expert Analysis
Volkswagen, Europe’s largest car manufacturer, recently highlighted the risks faced by automotive workers by announcing job cuts amid declining sales in China and the impact of tariffs imposed by Donald Trump.
Emily Sawicz, an analyst at consultancy RSM, described the industry as being at a “crisis point.” She added that the war in the Middle East is likely to exacerbate the situation by increasing energy prices and disrupting supply chains for essential materials such as aluminium.
