UK car output fell again in July, according to fresh industry figures, piling pressure on manufacturers already battling export weakness and rising costs. The latest data spotlights a steep monthly slide and growing concerns about Britain’s competitiveness in vehicle manufacturing.
Output plunges as exports weaken
New statistics from the motor trade show total vehicle production in July dropped by 11.6%, to 63,655 units. The Society of Motor Manufacturers and Traders (SMMT) blamed the fall mainly on lower exports.
- Overall exports fell by almost 16%.
- Deliveries to China plunged sharply, down about 36.9%.
- Shipments to other major markets also declined.
Manufacturers point to several factors behind the decline. These include model changeovers, the shutdown of a plant last year and uncertainty over long-term policy. Together, these pressures have cut production momentum across factories in the UK.
Electrified vehicle output bucks the trend
Despite the overall fall, production of electric and hybrid vehicles rose in July. That segment recorded its first monthly increase this year, signaling some resilience in the transition to zero-emission cars.
- 25,678 electrified models were built, an increase of 6.8%.
- Electrified vehicles now account for more than four in 10 cars manufactured.
- Factory highlights include Nissan’s Sunderland plant and Stellantis’ Ellesmere Port site.
The shift toward electrified models is clear, yet the gains have not been enough to offset declines elsewhere in the sector.
Year-to-date picture and short-term outlook
So far this year, UK plants have produced fewer than 450,000 cars and light commercial vehicles. That represents an 8.1% fall compared with the same period last year.
Industry forecasts suggest output will remain broadly flat through 2026 at roughly 740,000 units, with growth expected to resume in 2027 if conditions improve.
Why recovery is uncertain
- Policy uncertainty is deterring investment in new models.
- High energy costs are increasing production expenses.
- Global trade frictions and weaker demand in key export markets are limiting order books.
Industry calls for urgent reforms and investment
The SMMT has urged the government and industry to take action to protect UK manufacturing. Its message stresses that changes are needed to keep factories open and attract global investment.
Key asks from the sector include:
- Meaningful reform of the Zero Emission Vehicle (ZEV) mandate.
- Measures to reduce the cost of energy for industry.
- Negotiations to safeguard fair access to top export markets.
ZEV mandate under review
Under current rules, 80% of new car sales must be zero-emission by the end of the decade. The government’s review has proposed a lower threshold, around 50%, to reflect affordability and market realities.
Industry leaders say a revised target could boost confidence among manufacturers considering UK-based production for future models.
Numbers to note: the latest statistics
- Total vehicles produced in July: 63,655 (-11.6%).
- Export decline in July: ~16%.
- Drop in China deliveries: 36.9%.
- Electrified vehicles produced: 25,678 (+6.8%).
- Electrified share of output: now >40% (up from ~30% last year).
- Year-to-date production: <450,000 units (-8.1% vs 2025).
- Estimated 2026 output: ~740,000 units.
- Government target: 1,000,000 units by 2030 (conditional on reforms).
What manufacturers are doing now
Firms are shifting more resources into electrified lines and preparing for upcoming model changes. Some plants have paused or adjusted production schedules as they manage supply and demand imbalances.
Executives say securing investment for new models hinges on clearer government policy and competitive costs for energy and components.
Potential risks and what to watch next
- Further drops in demand from China or other major markets.
- Prolonged high energy prices affecting margins.
- Delays or inability to attract investment for next-generation models.
Policy decisions on the ZEV mandate and trade talks with key partners will be closely watched by the sector. Those outcomes could determine whether production stabilises or continues to shrink in the months ahead.
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