Car production down in first half as manufacturers invest in electric future

UK car production fell -7.6% in the first six months of the year, according to new figures published today by the Society of Motor Manufacturers and Traders (SMMT). Factories turned out 416,074 units, 34,094 fewer than in the same period in 2023, following a -26.6% decline in June caused by multiple model changes. The performance was expected as manufacturers retool lines to make electrified models following some £23.7 billion of UK investment announced last year.

Amid this transition, first half year electrified vehicle (battery electric, plug-in hybrid and hybrid) production was down -7.6%, in line with overall volumes, to 157,224 units. This represents more than a third (37.8%) of all output, unchanged from last year. In the same period, overall car output for the UK market was up 17.7% to 106,157 units, but this was not enough to offset a -13.9% decline in production for export, with more than seven-in-10 cars made destined for customers overseas.

Given the importance of exports to UK car production, the role of free and fair global trade cannot be overstated, especially with the EU, which remains by far the most important market for UK car makers, taking 55.4% of all exports in the first six months, equivalent to 171,745 units. The US, China, Turkey and Australia made up the rest of the top five export locations, accounting for a combined 29.4% of all overseas orders. Japan, Canada, South Korea, UAE and Switzerland completed the top 10.

Mike Hawes, SMMT Chief Executive, said, “The UK auto industry is moving at pace to build the next generation of electric vehicles – a transition that can be a growth engine for the entire British economy. The new government’s commitments to gigafactories, a decarbonised energy supply and a faster planning system will help boost our competitiveness and sustain employment in a sector that delivers well paid, skilled jobs nationwide. Amid fierce global competition, however, industry and government must work quickly to deliver those commitments, creating an industrial strategy that enables the growth the economy craves.”

The latest independent production outlook illustrates how the EV transition is impacting UK light vehicle production, which is now expected to decline -9.3% this year to around 910,000 units as structural changes are undertaken in British plants. Output is then set to recover to just over 1.1 million units in 2028 when more than half of all UK car and van production is expected to be zero emission, and reach some 1.167 million by the end of the decade. With the right political, industrial and economic conditions, by 2035 the UK could cumulatively have produced more than nine million zero emission light vehicles – 600,000 more than anticipated under current outlooks and worth over £290 billion at factory gate prices.

SMMT’s Vision 2035: Ready to Grow, published in June, sets out a plan to help deliver such conditions, focused on developing the domestic market for EVs, industrial transformation, reskilling, providing clean energy and ensuring free and fair trade with global markets. It dovetails with the the new government’s commitment to an industrial strategy and its Automotive Sector Plan, and the industry is ready to work with government to ensure the long-term success of the sector and all those who depend on it for their mobility, services and livelihoods.