Summary of UK Car Production Decline
Overview
UK car production has experienced a significant decline, reaching its lowest level for May since 1949. This downturn is attributed to the impact of US tariffs on exports, as reported by the Society of Motor Manufacturers and Traders (SMMT).
Key Statistics
Production Figures: In May, car production fell by nearly one-third compared to the previous year, totaling 49,810 units. This figure marks the lowest production level for May in 76 years, excluding the pandemic lockdown period.
Export Impact: Exports to the US halved due to new tariffs, which led some UK manufacturers to suspend shipments.
Tariff Effects
US Tariffs: The Trump administration imposed a 25% tariff on cars and car parts in March, significantly affecting UK exports.
Manufacturers’ Response: Following the tariffs, Jaguar Land Rover (JLR) halted shipments to the US in April, and Aston Martin reduced its exports. The US market’s share of UK exports dropped from nearly 20% to just over 10% in May.
Transition to Electric Vehicles
The decline in production is also linked to ongoing transitions in manufacturing towards electric vehicles. For instance, JLR is moving towards an all-electric brand, while Nissan is preparing to launch a new Leaf model.
Recent Developments
Agreement on Tariffs: In May, the US and UK reached an agreement to reduce import taxes on 100,000 British cars per year from 25% to 10%. This quota aligns with the number of vehicles the UK exported last year, with any additional exports subject to a 27.5% tax.
The new tariff structure is expected to take effect before the end of June, potentially easing the production constraints imposed by the previous tariffs.
Future Outlook
Optimism for Recovery: Mike Hawes, the SMMT’s chief executive, acknowledged the challenges faced in 2025 but expressed optimism for recovery. He highlighted the importance of trade deals with key markets such as the US, India, and the EU, along with UK government strategies aimed at supporting the industry.
Industrial Strategy: The UK’s recently announced industrial strategy includes initiatives for reducing energy costs for manufacturers and a £2.5 billion fund for automotive capital and research and development.
Conclusion
While the current state of UK car production is concerning, particularly due to the impact of US tariffs and the shift towards electric vehicles, recent agreements and government strategies provide a glimmer of hope for the industry’s recovery in the near future.
