UK car and van production has fallen to its lowest level since 1953—excluding the pandemic shutdown—after a bruising six months for the automotive sector marked by uncertainty over US tariffs, factory closures, and confusion around new electric vehicle (EV) grants.
Figures released by the Society of Motor Manufacturers and Traders (SMMT) show that car output fell 7.3% in the first half of the year, while van production plunged 45%, driven in part by the closure of Vauxhall’s Luton plant.
The slump leaves the UK auto industry at its weakest point in seven decades, despite a modest uptick in June following the implementation of a long-awaited US-UK tariff deal that reduced tariffs on UK-built vehicles exported to America from 27.5% to 10%.
Mike Hawes, SMMT’s chief executive, called the figures “depressing” and said he hoped the first half of 2025 marked “the nadir” for the industry. However, he warned that the UK was unlikely to return to its 2021 output of one million vehicles annually by the end of the decade.
“The government’s 2035 target of 1.3 million vehicles per year is quite some ambition from where we are,” Hawes said. “We clearly require at least one, if not two, new entrants to come into UK production to achieve it.”
One bright spot was the production of electrified vehicles, which rose by 1.8%. Battery electric, hybrid, and plug-in hybrid models now account for more than two in five vehicles produced in the UK.
However, the SMMT raised concerns about the lack of clarity around the government’s new EV grant scheme, which offers up to £3,750 for vehicles priced below £37,000. While the return of incentives was welcomed, the criteria for eligibility remain opaque.
Grants will be awarded based on the carbon footprint of the vehicle and its battery during production, and only to manufacturers with verified science-based targets—but the government has yet to publish clear thresholds.
“The difficulty is, we don’t know. Nobody knows—not even government—really knows yet which models and which brands will qualify,” said Hawes. “Your dealer cannot tell you whether the model you’re considering is eligible.”
He warned that with September being the second-biggest month for new car registrations, clarity was urgently needed.
A Department for Transport spokesperson said that dozens of models were expected to qualify for the new grant and that £650 million in funding would be awarded on a first-come, first-served basis. The government said it was engaging closely with manufacturers and had published guidance to support applications.
The UK’s second-largest export market for vehicles is the United States, and several manufacturers paused or scaled back production earlier this year amid uncertainty over President Trump’s shifting tariff policies.
The new US-UK tariff agreement, which took effect on 30 June, has already had a small positive effect on June production figures, according to the SMMT. However, Hawes stressed that sustained recovery would require long-term stability and greater policy clarity, especially around EV policy.
With the electric transition accelerating globally, the UK risks falling behind unless it can attract new investment in battery production, gigafactories, and domestic assembly.
“We’re seeing record EV production shares, which is a sign of strength. But the fundamentals are fragile,” said Hawes. “We need certainty, capacity and competitive conditions to turn recovery into growth.”
While the government remains optimistic that its EV grants and trade deals will provide a substantial boost, the SMMT’s warning paints a stark picture of an industry at a crossroads—caught between global headwinds and domestic policy delays, and in urgent need of momentum.
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UK vehicle manufacturing hits 70-year low as industry faces tariff turmoil and EV grant confusion
