6:30 am, July 30, 2026
UK vehicle production fell by 7.5% in the first half of 2026 as manufacturers continued to grapple with model changeovers, weak global demand and rising costs.
New figures published by the Society of Motor Manufacturers and Traders (SMMT) show factories built 385,979 cars and commercial vehicles between January and June, although production showed signs of stabilising in the second quarter.
Overall output in Q2 slipped by just 128 vehicles compared with the same period last year, while car production edged up 0.2%.
June also continued the improving trend, with overall vehicle production easing by just 1.2% to 68,200 units as car exports rose for the third consecutive month and commercial vehicle exports jumped 54.3%.
Exports remain the backbone of the UK’s manufacturing sector, accounting for 76.2% of all vehicles produced during the first six months of the year.
The EU remained Britain’s largest export market, taking 166,801 vehicles and accounting for 58.3% of all car exports, while the US remained the second-largest destination despite volumes falling 4.6%. Shipments to China dropped sharply by 44.7%.
The SMMT said model changeovers at several manufacturers had continued to suppress production volumes, particularly for electrified vehicles, which accounted for around four in 10 cars built during the first half despite output falling 8.6%.
The trade body expects UK car and light commercial vehicle production to remain broadly flat at around 740,000 units this year before returning to growth in 2027.
Investment threat
However, the SMMT warned that further investment would depend on the UK becoming a more competitive manufacturing location.
The organisation is calling on the government to reduce industrial energy costs, reform the ZEV Mandate and secure improved trading arrangements with the EU, warning current conditions are undermining investment decisions.
Mike Hawes, SMMT chief executive, said: ‘Global vehicle production remains under intense pressure, and the UK is no exception. Global market weakness, trade pressures and uncompetitive costs are taking their toll.
‘But decline is not inevitable. Urgent action on energy costs, reform of market regulation and improved trading arrangements with our global partners would ensure the sector can return to growth.
‘And given that growth would be across every region in the UK, there is every reason for the new government to get behind the sector.’
The SMMT said the UK automotive manufacturing sector generates more than £85bn in annual turnover, contributes £18bn to the economy and directly employs around 188,000 people. Across manufacturing, retail and the aftermarket, the wider automotive sector supports around 830,000 jobs.