The United Kingdom's automotive sector experienced a significant decline in vehicle production last year, largely due to the slowdown in transitioning to electric vehicles. Official figures reveal that total car production fell by nearly 12%, with a notable decrease in battery electric, plug-in hybrid, and hybrid vehicle outputs. Despite these challenges, industry leaders remain optimistic about future growth, citing substantial investments and strategic plans to enhance competitiveness.

Production Decline Reflects Shift Toward Electrification

The downturn in car manufacturing can be attributed to various factors, including preparation for electric vehicle (EV) production and global market weaknesses. The Society of Motor Manufacturers and Traders (SMMT) reported that car production dropped to just over 900,000 units in 2024, marking a significant reduction from the previous year. Specifically, EV-related vehicle output saw a 20% decline, although it still represented over a third of total production. This shift highlights the ongoing transition towards electrification, which is expected to bring new opportunities despite current challenges.

Industry insiders noted that factories are gearing up for the future by investing heavily in EV technology. Over £23.5 billion has been committed to this transition over the past two years, signaling a strong commitment to sustainable mobility. However, the immediate impact of these changes has led to a temporary dip in production volumes. Mike Hawes, SMMT’s chief executive, emphasized that the industry is moving in one direction but faces intense competition for investment. He advocated for incentives to encourage consumer adoption of EVs and favorable trade conditions, particularly with the EU, which remains the largest export market.

Export Trends and Future Outlook

Despite the overall decline in production, exports played a crucial role in sustaining the UK automotive industry. Nearly 80% of manufactured cars were exported, with the top three markets being the EU, the US, and China. While exports to the EU and China decreased, shipments to the US surged by 38.5%. This divergence underscores the importance of maintaining supportive trading relationships globally. Commercial vehicle production, on the other hand, saw a modest 4% increase, marking its best performance since 2008.

Looking ahead, the SMMT anticipates a gradual recovery in production levels. The latest independent forecasts predict that car and light van production will reach approximately 839,000 units this year, rising to 930,000 by 2027, with potential to exceed one million units by 2030. Hawes highlighted that while growing pains are inevitable during this transformation, the long-term prospects for the industry are promising. To secure this future, he stressed the need for robust industrial and trade strategies that foster competitive conditions amidst a protectionist global environment. The UK government’s industrial strategy plans have been met with optimism, offering hope for a brighter horizon in the automotive sector.