What happens in Europe matters to the UK automotive sector

SMMT: Attracting investment is paramount, says Mike Hawes

New data published by the Society of Motor Manufacturers & Traders (SMMT) shows the fourth monthly decline in vehicle manufacturing in November which, while disappointing, is unsurprising given it continues trends seen across the year.

With car factories retooling to produce EVs, volumes gradually normalising after a cyber incident and the consolidation of the UK’s volume van production from two plants into one, the challenges have been obvious, but industry can be more optimistic about a return to growth in 2026. A tangible sign of that increased positivity was the start of production of the next-generation Nissan LEAF in Sunderland after a £450 million commitment – a major boost for the company, region, supply chain and economic growth for the country.

Attracting more investment is paramount and, for our export-led sector, that requires strong trading relationships. This week’s agreement of a modernised UK-South Korea FTA was extremely welcome, maintaining permanent tariff-free access, introducing workable rules of origin and increased cooperation across the supply chain.

The EU, however, remains the biggest market for UK automotive exports and the largest source of products for UK car buyers, particularly EVs – so what happens there matters.

The European Commission’s Automotive Package, announced this week, seeks to respond to some of the challenges facing the industry. It proposes allowing a greater range of technologies beyond 2035 – attempting to provide Europe with increased flexibility to manage a sustainable transition – without compromising the ambition. This will, however, put the UK out of step with our biggest trading partner so the UK government’s review of our own regulation may need to be brought forward to ensure it considers the global context alongside all aspects of market performance.

Mike Hawes is chief executive of the SMMT