New vehicle manufacturing in the UK saw a decrease of 11.9% in the first half of 2025, with total production reaching 417,232 units, according to the latest figures published by the Society of Motor Manufacturers and Traders (SMMT).

A slight recovery was noted in June, where car production increased by 6.6%, although this was compared to a period last year that faced challenges such as model changeovers and supply chain disruptions.

Overall, car output for the year to date has fallen by 7.3%, with 385,810 cars produced.

The commercial vehicle sector experienced a more severe decline, with production dropping by 45.4% to 31,422 units due to restructuring efforts at manufacturing plants.

In contrast, the production of electrified vehicles saw a modest rise of 1.8%, resulting in 160,107 units produced, which accounted for 41.5% of total output in the first half of the year.

The UK automotive industry remains focused on exports, with 76.9% of production intended for international markets, the report said.

The European Union is the largest destination for UK car exports, making up 54.4% of the total, followed by the US at 15.9%, China at 7.5%, Turkey at 4.1%, and Japan at 2.7%.

These five markets together represent over 80% of the UK’s overseas sales.

Despite a decline in export volumes over the past three months, culminating in an 18.7% drop in June, the US continues to be the largest single export market for UK vehicles, highlighting the significance of the recent UK-US trade agreement, which provides reduced tariffs for UK automotive exports.

Looking forward, the global economic environment remains uncertain, with projections indicating a 15% decrease in total vehicle output to 755,000 units for 2025.

However, a potential recovery is anticipated in 2026, with a forecasted increase of 6.4% bringing production to 803,000 units.

The report suggests that the swift implementation of the new industrial strategy could enhance the UK’s competitiveness in the automotive sector, potentially restoring its position among the top 15 global auto manufacturing locations and contributing an estimated £50bn to the economy.

Additionally, the government’s automotive sector strategy, DRIVE35, outlines initiatives aimed at supporting the industry’s economic and environmental objectives.

The introduction of the Electric Car Grant, which allocates £650m for electric vehicle incentives, may also stimulate the domestic market and improve the UK’s attractiveness for industrial investment.

SMMT chief executive Mike Hawes said: “Global economic uncertainty and trade protectionism have taken their toll on automotive production across the globe, with the UK no exception. The figures are not, therefore, unexpected but remain very disappointing.

“However, there are foundations for a return to growth. The industry is moving to the technologies that will be the future of mobility. Our engineering excellence, highly-skilled workforce and global reputation are strengths, and we have an Industrial Strategy with advanced manufacturing and automotive at its core.

“With rapid delivery and the right conditions, UK Automotive can reverse the current decline and deliver the jobs, economic growth and decarbonisation that Britain needs.”