Production slump hits home and export markets
UK vehicle manufacturing ground to a near halt in the first half of 2026, with total production dropping 7.5% to 385,979 units. That is 31,000 fewer vehicles than the previous year. The Society of Motor Manufacturers and Traders said the decline showed how much the sector is struggling under pressure from tariffs, weak global demand and high costs.
Domestic output fell the hardest, down 13% year on year. Exports also took a hit, with production down 5.6%. But there was a slight rebound in the second quarter, when output rose 3.9% compared to the first quarter of 2026.
EU and Trump-era tariffs strain UK carmakers
More than 75% of cars built in the UK are exported. Europe remains the top market, with the US coming in second. But Donald Trump’s tariffs have hurt trade with America, and new EU rules are complicating exports further. The SMMT highlighted how both are making it harder for UK manufacturers to compete.
The lobby group called for urgent action on energy costs, which it called 'sky high,' and for revised EV rules that better match consumer demand. It also said UK trading agreements with global partners needed improving.
EV regulations outpacing demand
The UK’s zero-emissions vehicle mandate, which requires automakers to sell more electric cars each year, is being called too strict. Currently, 30% of cars sold in the UK must be emissions-free. By 2035, all combustion engines and hybrids must be phased out.
Keir Starmer had signaled a potential review of the mandate before leaving office. His successor, Andy Burnham, and business secretary Jonathan Reynolds have not yet outlined their plans for the policy. The SMMT said reform is 'vital' to stop the UK from falling further behind in the EV transition.