UK vehicle production fell 11.6% year on year in July to 63,655 units, with weaker exports and the earlier scheduling of summer maintenance shutdowns contributing to the decline, according to figures released today by the Society of Motor Manufacturers and Traders (SMMT).
Car production fell 10.6% to 61,767 units, despite output for the domestic market rising 9.3%. Commercial vehicle production was also sharply lower, falling 34.4% to 1,888 units. Output for UK customers declined 49.6%, while exports fell 18.5%.
The increase in UK-bound production was insufficient to offset a 15.8% decline in exports, which fell 15.9% to 47,377 units. In fact, shipments to all of the UK industry’s major export markets declined during the month. Indeed, exports to the European Union fell 15.2%, while shipments to the US were down 17.7%. Exports to Turkey fell 18.5%, China declined 36.9% and Japan dropped 24.4%. The situation highlights the continued pressure on UK automotive manufacturers from weaker overseas demand and heightened global competition.
Electrified vehicle output rises
Nevertheless, it wasn’t all bad news for the UK automotive sector in July. One of the more positive developments was the performance of electrified vehicle production.
Output of fully electric and hybrid cars increased 6.8% to 25,678 units – the first monthly increase recorded so far this year. Electrified vehicles accounted for more than four in every 10 cars produced during the month, compared with around three in 10 a year earlier.
However, despite the monthly increase in electrified output, overall UK vehicle production remains below last year’s levels. In the first seven months of 2026, factories produced just under 450,000 cars and commercial vehicles, representing an 8.1% decline on the same period in 2025.
The SMMT attributed the year-to-date decline to factors including model changeovers, the closure of a plant last year and continued uncertainty around trade and investment. An independent forecast nevertheless expects UK car and light vehicle production to remain broadly stable this year at around 740,000 units, before returning to growth in 2027.
Image credit: SMMT.
Competitiveness remains a concern
The SMMT said UK output could still reach one million vehicles by the end of the decade, but argued that this would depend on improving the country’s competitiveness and securing new vehicle model investment.
The trade body welcomed the government’s recently launched review of the Zero Emission Vehicle (ZEV) Mandate, arguing that reforms to the regulation, alongside stronger market incentives, could help reduce the high cost of selling electric vehicles in the UK.
Energy costs are another concern. The SMMT called for structural reform, warning that UK industrial energy costs will remain around 60% higher than those in Europe despite the forthcoming British Industrial Competitiveness Scheme (BICS).
The organisation also raised concerns over the future of UK-EU automotive trade, pointing to proposed European Commission ‘Made in the EU’ measures and tougher rules of origin requirements under the EU-UK Trade and Cooperation Agreement, which are due to come into force in January.
The SMMT warned that without urgent action, the changes could put cross-Channel automotive supply chains and an €80bn-a-year trading relationship at risk.
Mike Hawes, chief executive of the SMMT, said: “July’s figures underline the intense pressure under which UK vehicle manufacturers are currently operating.
“Although the negative performance is exacerbated by shutdown calendarisation and model changeovers, it is being compounded by weaker overseas demand and fierce global competition.
“The rise in electrified vehicle production is encouraging, but long-term success depends on making the UK a more competitive place to make and sell vehicles.
“Meaningful and urgent reform of the ZEV Mandate, reduction of the UK’s sky-high energy costs and negotiations to safeguard free and fair trade with our largest and closest export market are essential to put UK automotive manufacturing back on a path to growth.”
For more articles like this, visit our Leadership channel
