The Society of Motor Manufacturers and Traders (SMMT) reported a sharp decline in UK car output at the start of the year, with production down 13.6 per cent in January as weak export demand weighed heavily on the sector.
A total of 67,415 vehicles left British factories during the month, including 65,249 cars and 2,166 commercial vehicles. Car production fell by 8.2 percent compared to January 2025, while production of commercial vehicles fell by 68.6 percent year-on-year.
The fall was primarily driven by reduced overseas demand. While domestic demand for UK-built cars remained stable, export prices softened, particularly in markets outside Europe. Exports tend to account for the majority of British car production, leaving manufacturers exposed to fluctuations in global demand and trade conditions.
The United States remained the second largest destination for UK-built cars after the European Union, accounting for 14.1 percent of exports. Japan followed with a 2.7 percent share, while China and Turkey took 2.5 percent and 2.4 percent respectively.
Electric vehicle emissions have also decreased. Production of battery electric vehicles (BEVs), plug-in hybrids and hybrid models fell 10.6 percent to 26,854 units, representing 41.2 percent of total vehicle output. Despite the decline, electrified vehicles continue to make up a large part of UK production as manufacturers switch to zero-emission platforms.
The industry body said the weak start to the year reflected weak global demand and stressed the importance of stable trade relations. Protectionist measures and “made in Europe” proposals in other markets have been identified as additional headwinds.
Mike Hawes, chief executive of SMMT, described January’s figures as disappointing but pointed to an expected recovery towards the end of the year as new types of electricity are introduced.
“Weak sales in markets outside Europe amid soft demand provided a disappointing start to the year for UK car manufacturing,” he said. “It reinforces the need for a forward-looking trade agenda that protects existing exclusive access and creates new ones in markets around the world.”
SMMT expects vehicle production to increase by more than 10 percent to 790,000 units in 2026, with the potential to reach one million vehicles in 2027, provided new model launches continue on schedule and investment conditions remain supportive.
The outlook depends on competitive energy costs, a strong domestic market and targeted support for procurement, the trade association said, as the sector continues a capital-intensive transition to electrification.
