Britain’s vehicle production declined significantly in 2025, with the sector experiencing its toughest year in a generation. According to the Society of Motor Manufacturers and Traders (SMMT), factories producing mainly foreign-owned brands, such as Nissan and Jaguar Land Rover, manufactured a total of 764,715 vehicles, down 15.5 percent from 2024.
The SMMT attributed the decline to structural changes, new trade barriers, and a cyberattack on Jaguar Land Rover, which stopped production at one of the UK’s most important manufacturers. The industry also faced ongoing restructuring as plants shift towards a decarbonized future. SMMT chief executive Mike Hawes stated that 2025 was a challenging year for UK vehicle manufacturing, with output constrained by these factors.
Despite the challenges, the SMMT forecast a recovery in 2026, with output expected to rise by over 10 percent to 790,000 units. The potential to reach one million units by 2027 is also predicted. The production of battery-electric, plug-in hybrid, and hybrid vehicles increased by over 8 percent in 2025, accounting for a record 41.7 percent share of output.
The UK has set ambitious targets to transition to electric vehicles, aiming to ban the sale of new combustion-engine vehicles by 2030 and hybrids by 2035. The US-UK trade agreement, which came into effect in June, reduced tariffs on British car exports to the US, providing some relief to the industry.
However, the sector faced additional pressure last year due to US President Donald Trump’s tariffs, which impacted exports to the world’s largest economy. Jaguar Land Rover, owned by India’s Tata Motors, also suffered a severe cyberattack in September, disrupting sales and production and forcing the company to seek emergency funding. The incident caused widespread disruption across its supply chain, with unions warning that some suppliers were at risk of collapse due to delayed payments.
The UK auto sector’s decline in 2025 highlights the challenges faced by the industry in its transition to a decarbonized future. Despite these challenges, the forecast for 2026 suggests a potential recovery, driven by increasing demand for electric and hybrid vehicles. As the industry continues to evolve, it is likely to face further challenges and opportunities in the years to come.
