UK auto output faces tough period, but foundations set for recovery, says SMMT Chief

Mike Hawes highlights impact of global challenges and significance of new trade deals for industry rebound

UK auto output faces tough period, but foundations set for recovery, says SMMT Chief

Mike Hawes, Chief Executive of the SMMT, acknowledges the current challenges facing the global automotive sector, describing them as “perhaps the most acute in living memory.” Economic uncertainty, low demand, structural changes, and trade protectionism have contributed to an 11.9% decline in British car and commercial vehicle production during the first half of the year, marking the toughest first half in seven decades (excluding 2020).

Despite this, Hawes points to positive signals, including a record four in 10 of all cars built now being electrified vehicles, and a 6.6% growth in overall car production in June as key export markets stabilise.

The volatility is partly attributed to punitive tariffs, particularly from the former US administration. Hawes highlights the UK’s diplomatic success in being the first nation to secure and implement a trade deal to mitigate these tariffs, evidenced by fluctuating but ultimately increasing production volumes.

Further boosting confidence is the recently signed UK-India trade agreement, which partially liberalises the Indian automotive market for the first time. This deal is expected to provide UK automakers with significant commercial opportunities, including reduced tariffs for internal combustion engine (ICE) vehicles from day one and for electrified vehicles and parts in the longer term.

These developments, combined with recent announcements such as the new Industrial and Trade Strategies, the DRIVE35 programme, and support for EV uptake and infrastructure, form the foundation for recovery. The SMMT’s latest outlook suggests current production levels are the lowest point, forecasting a 6.3% rebound in 2026 and further growth to 875,000 units by the decade’s end.

Hawes stresses that guaranteeing long-term growth in a competitive global environment depends on restoring the UK’s competitive edge through rapid delivery of the automotive programme and wider Industrial Strategy measures. These include reducing energy costs, accelerating infrastructure rollout, and addressing skills gaps.

Despite challenges, the UK remains a leading high-value manufacturer, generating £16 billion in revenue this year and attracting nearly £1.8 billion in investment across various UK locations. With a focus on successful delivery, the UK aims to return to the top 15 global auto manufacturing locations, potentially delivering an additional £50 billion economic windfall.

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