The British automotive sector has experienced a significant downturn, with vehicle production falling below one million units last year. The Society of Motor Manufacturers and Traders (SMMT) attributes this decline primarily to the industry's shift towards electric vehicles (EVs). Additionally, the organization expressed concerns over potential tariffs from the United States under President Donald Trump's administration. Despite these challenges, there remains optimism about future growth, contingent on favorable economic conditions and supportive trade policies.

In 2023, UK factories, predominantly owned by foreign entities like Nissan and Jaguar Land Rover, produced a total of 905,233 vehicles—a decrease of 11.8% compared to the previous year. This reduction can be attributed to several factors, including the cessation of production for long-standing models as manufacturers retool their facilities for EV production. Weakness in key global markets and a slowdown in the transition to electrification due to tough economic conditions have also played a role. SMMT forecasts further declines in output to 839,000 units this year before a projected recovery above one million vehicles in 2028.

Almost 80% of the cars manufactured in the UK were exported, mainly to the European Union. While the production of battery electric, plug-in hybrid, and hybrid vehicles declined by more than one-fifth, they still accounted for over one-third of the total UK output. Mike Hawes, the chief executive of SMMT, emphasized the importance of industrial and trade strategies that foster competitive conditions essential for growth amidst an increasingly protectionist global environment.

Hawes noted that new, exciting models and battery production are on the horizon, presenting clear potential for growth. However, he voiced concerns about rising trade tensions and the potential imposition of tariffs, particularly from the US. The US market is crucial for luxury vehicles such as Bentley and Rolls-Royce, providing opportunities to absorb any potential tariffs, though avoiding them would be preferable.

Across the Atlantic, President Trump's recent executive order on "Unleashing American Energy" included measures to ensure a level playing field for gasoline-powered vehicles and halt federal funding for new EV charging stations. This policy shift has added another layer of uncertainty for the UK automotive industry. Despite these challenges, the sector remains optimistic about its future, provided it receives the necessary support and favorable market conditions.