UK car and van production has reached its lowest level since 1953—excluding the pandemic shutdown—after a challenging six months marked by uncertainty over US tariffs, factory closures, and confusion surrounding new electric vehicle (EV) grants.
Figures released by the Society of Motor Manufacturers and Traders (SMMT) indicate that car output decreased by 7.3% in the first half of the year, while van production dropped by 45%, partly due to the closure of Vauxhall’s Luton plant.
This decline leaves the UK automotive industry at its weakest point in seven decades, despite a modest increase in June following the implementation of a US-UK tariff deal that reduced tariffs on UK-built vehicles exported to the US from 27.5% to 10%.
Mike Hawes, SMMT’s chief executive, described the figures as “depressing” and expressed hope that the first half of 2025 would mark the lowest point for the industry. However, he cautioned that the UK is unlikely to return to its 2021 output of one million vehicles annually by the end of the decade.
“The government’s 2035 target of 1.3 million vehicles per year is quite ambitious from our current position,” Hawes said. “We clearly require at least one, if not two, new entrants to come into UK production to achieve it.”
A positive note was the rise in electrified vehicle production, which increased by 1.8%. Battery electric, hybrid, and plug-in hybrid models now constitute more than two in five vehicles produced in the UK.
Nonetheless, the SMMT raised concerns about the lack of clarity around the government’s new EV grant scheme, which offers up to £3,750 for vehicles priced below £37,000. While the return of incentives was welcomed, the criteria for eligibility remain unclear.
Grants will be awarded based on the carbon footprint of the vehicle and its battery during production, and only to manufacturers with verified science-based targets. However, the government has yet to publish clear thresholds.
“The difficulty is, we don’t know. Nobody knows—not even the government—really knows yet which models and which brands will qualify,” said Hawes. “Your dealer cannot tell you whether the model you’re considering is eligible.”
He warned that with September being the second-biggest month for new car registrations, clarity is urgently needed.
A Department for Transport spokesperson stated that dozens of models are expected to qualify for the new grant and that £650 million in funding will be awarded on a first-come, first-served basis. The government mentioned it was closely engaging with manufacturers and had published guidance to support applications.
The UK’s second-largest export market for vehicles is the United States, and several manufacturers paused or scaled back production earlier this year amid uncertainty over previous US tariff policies.
The new US-UK tariff agreement, which took effect on 30 June, has already had a small positive effect on June production figures, according to the SMMT. However, Hawes emphasised that sustained recovery would require long-term stability and greater policy clarity, especially regarding EV policy.
With the electric transition accelerating globally, the UK risks falling behind unless it can attract new investment in battery production, gigafactories, and domestic assembly.
“We’re seeing record EV production shares, which is a sign of strength. But the fundamentals are fragile,” said Hawes. “We need certainty, capacity and competitive conditions to turn recovery into growth.”
While the government remains optimistic that its EV grants and trade deals will provide a substantial boost, the SMMT’s warning highlights an industry at a crossroads—caught between global headwinds and domestic policy delays, and in urgent need of momentum.
