UK car manufacturing experienced a steep decline in 2025, hitting levels not seen in a decade. The industry produced 717,371 cars and 47,344 commercial vehicles – an eight percent drop from the previous year and roughly half the output compared to 2015. This downturn represents the “toughest year in a generation,” according to Mike Hawes, chief executive of the Society of Motor Manufacturers and Traders (SMMT).
The Perfect Storm of Challenges
The collapse in production wasn’t due to a single factor, but a confluence of economic and industrial headwinds. Structural shifts within the industry, alongside new trade barriers and a crippling cyberattack, all contributed to the decline. The Vauxhall factory closure in Luton further exacerbated the situation, impacting commercial vehicle output.
However, the most significant blow came from Jaguar Land Rover (JLR). The company faced internal restructuring with the Jaguar brand’s temporary pause before its planned luxury revival. Compounding this, tariffs imposed by the US under President Trump made JLR’s already premium vehicles less competitive. The August cyberattack, which halted production for over five weeks and cost an estimated £500 million, delivered the final blow, marking the most expensive cyber incident in UK history.
Export Dependence and Electric Shift
Despite the domestic slump, exports remain crucial. Three-quarters of all UK-made vehicles are shipped abroad, primarily to Europe, China, and the US. The Nissan Qashqai, MINI Cooper, and Toyota Corolla lead the export charts, benefiting from strong international demand.
Notably, electric and hybrid vehicles now account for two in five new cars produced in the UK, signaling a gradual but significant shift towards cleaner technologies. This trend is critical because the global automotive market is increasingly prioritizing EVs.
Glimmers of Hope: Chinese Investment and New Models
The outlook isn’t entirely bleak. JLR is pursuing a potential partnership with Chinese automotive giant Chery to leverage spare production capacity, which could boost efficiency and safeguard jobs. Additionally, the revival of the Nissan Leaf production at the Sunderland plant promises another popular model for export.
The SMMT forecasts a ten percent rebound in 2026, reaching 790,000 units, with potential to exceed one million in subsequent years. This recovery hinges on favorable economic conditions, competitive energy costs, avoidance of new trade restrictions, and a robust domestic market.
“The key to long-term growth is the creation of the right competitive conditions for investment,” Hawes stated, underscoring the need for policy support to sustain the industry’s revival.
The current situation underscores the UK automotive industry’s vulnerability to external shocks and its reliance on exports. The path forward requires strategic partnerships, proactive cybersecurity measures, and a supportive regulatory environment to ensure long-term stability and growth.
