SMMT: Decline in vehicle manufacture during initial period as automakers focus on electric advancements

In the first half of this year, UK car production witnessed a decrease of -7.6%, as disclosed in the latest data released today by the Society of Motor Manufacturers and Traders (SMMT). With 34,094 fewer units produced compared to the same period in 2023, total output reached 416,074 units, primarily due to a -26.6% drop in June caused by various model modifications. This decline was anticipated as manufacturers revamped their production lines to cater to electrified models following a significant £23.7 billion investment in the UK announced last year.¹

In the midst of this transition, the production of electrified vehicles (including battery electric, plug-in hybrid, and hybrid) in the first half of the year decreased by -7.6%, aligning with overall production figures, totaling 157,224 units. This accounted for over a third (37.8%) of the total production, which remained consistent with the previous year.² Meanwhile, domestic car output surged by 17.7% to 106,157 units, although it couldn’t offset the -13.9% decline in exported production, with more than 70% of the vehicles manufactured intended for overseas markets.

Recognizing the vital role of exports in UK car production, the significance of open and equitable global trade cannot be emphasized enough, particularly with the EU being the major market for UK automakers, accounting for 55.4% of all exports in the initial six months, translating to 171,745 units. The United States, China, Turkey, and Australia rounded up the top five export destinations, collectively representing 29.4% of all foreign transactions. Japan, Canada, South Korea, UAE, and Switzerland completed the top 10 export locations.

In the words of Mike Hawes, SMMT Chief Executive:

The British automotive sector is rapidly accelerating the development of the next wave of electric vehicles – a shift that has the potential to propel the entire national economy forward. The recent governmental commitments to gigafactories, a decarbonized energy supply, and an expedited planning system will invigorate our competitiveness and preserve jobs in a sector that offers well-paying and skilled employment opportunities across the UK. Amid intense global competition, it is imperative for the industry and government to swiftly fulfill these commitments by formulating an industrial strategy that fuels the much-needed economic growth.

The latest independent production forecast sheds light on the impact of the electric vehicle transition on light vehicle production in the UK, which is predicted to decrease by -9.3% this year to approximately 910,000 units as structural adjustments are carried out in British facilities. Subsequently, production is slated to rebound to slightly over 1.1 million units in 2028, with zero-emission vehicles projected to make up over half of all UK car and van production, and is anticipated to reach around 1.167 million by the decade’s end.³ Given the appropriate political, industrial, and economic environments, the UK could potentially surpass nine million zero-emission light vehicles by 2035 – an excess of 600,000 units from current projections – valued at over £290 billion at factory prices.⁴

Depicted in the June publication of SMMT’s Vision 2035: Ready to Grow, is a roadmap designed to create conditions conducive for achieving this scenario. It concentrates on cultivating the domestic EV market, industrial transformation, workforce skill enhancement, sustainable energy provision, and ensuring fair trade partnerships with the global arena. Aligned with the government’s nascent industrial strategy and its Automotive Sector Plan, the industry is poised to collaborate with governmental bodies to guarantee the enduring prosperity of the sector and the livelihoods reliant upon it for transportation services.

1: SMMT computations based on publicized investment commitments in UK automotive production and R&D for 2023 from various brands such as MINI, JLR, Tata, and Nissan.
2: 170,231 electrified vehicles produced in H1 2023
3: Independent projection for car and light van production only– July 2024
4: SMMT analysis available at Vision 2035: Ready to Grow

SOURCE: SMMT