Vehicle production fell in October

SMMT: Automotive sector welcomes additional manufacturing support announced in Budget, but warns new EV tax will reduce UK’s investment appeal

UK car production fell in October, down -23.8%, according to the latest figures published by the Society of Motor Manufacturers and Traders (SMMT). 

A total of 59,010 units left factory gates – 18,474 fewer than in the same month last year – as Britain’s biggest automotive employer began its phased restart of operations after a cyber incident forced a pause in production.  

Following a recent trend, almost half the cars (46.2%) made in in the month were either battery electric, plug-in hybrid or hybrid, with volumes up 10.4% to 27,287 units. Overall car production for the UK market fell by -10.6% to 13,785 units, while output for export declined -27.1%. 45,225 cars were produced for global markets – representing more than three quarters of total output – with the EU, US, Türkiye, China and Japan the top five export markets. Shipments to the EU, US and Japan all fell, while those to Türkiye and China rose. 

Commercial vehicle (CV) production, meanwhile, declined for the seventh month in a row, by -74.9% to 3,106 units, reflecting the ongoing impact on the numbers of a major manufacturer consolidating operations into the North West.  Combined car and van production, therefore, was down by -30.9% in October with 62,116 units leaving factories. 

The production figures are released two days after the Budget in which the chancellor announced a number of welcome competitiveness boosting measures, including a further £1.5bn in automotive transformation funding, and the deferral of regulation to end employee car ownership schemes into the next parliament – a move the industry had warned could lead to annual losses of £1bn, putting up to 5,000 jobs at stake. 

The release also comes after government published a consultation on its proposed British Industrial Competitiveness Scheme (BICS) which should bring down sky-high energy costs for manufacturers.

In terms of market measures – which help make the UK an attractive place for manufacturing investment – the SMMT welcomed news of a £1.3bn top up to the electric car grant and changes to the VED expensive car supplement, reducing the number of EVs that will be subject to the higher tax. 

However, the SMMT says that the introduction of a new pay per mile EV tax (eVED) would undermine the impact of those supportive EV measures, reducing demand for the very vehicles manufacturers are now being compelled to sell. This, the SMMT warns, will reduce further the UK’s investment appeal just as it strives to attract new manufacturing operations given the Industrial Strategy’s ambition to boost vehicle output to 1.3 million units by 2035.

So far this year UK car and van manufacturers have turned out a total of 644,366 units representing a -17.0% fall on the same period in 2024. However, the SMMT says the latest independent production outlook expects growth to return in 2026 with a total of 828,000 cars and vans anticipated to be made next year, driven by new electric car models coming into production, and with the potential to reach some one million units by the end of this decade if the right conditions are in place. 

Mike Hawes, SMMT chief executive, said: “Another difficult month for UK vehicle production as the impact of the earlier cyber attack continued to be felt. Growth is on the horizon, however, and government has recognised the automotive industry as a pillar of national strategic importance, backing it with an industrial strategy and additional £1.5 billion to drive manufacturing competitiveness. Investment competitiveness also depends on a healthy domestic market, however, notably for EVs, and introducing a new electric Vehicle Excise Duty is the wrong measure at the wrong time. This new tax will undermine demand, so government must work with industry to reduce the cost of compliance and protect the UK’s investment appeal.”