Car industry on track for worst year since 1952

Yahoo

24-07-2025

British vehicle production will hit the lowest level seen since 1952 this year as US tariffs and weak demand across Europe hobble the automotive industry.
Car and van makers expect to make just 755,000 vehicles in 2025, down from a previous estimate of 818,000, according to the Society of Motor Manufacturers and Traders (SMMT).
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That would be the lowest total for 73 years, excluding the coronavirus pandemic, and represents an annual drop of nearly 17pc.
The malaise is a fresh headache for ministers as they battle to revitalise British industry, amid complaints that manufacturers are being squeezed by high energy costs and taxes.
Mike Hawes, chief executive of the SMMT, blamed the weak numbers on factory closures, poor demand for new cars, tariffs imposed by Donald Trump and the retooling of production lines to make electric vehicles (EVs), which requires some downtime.
He said: 'It has been one of the toughest periods in history for the UK automotive industry.'
Total vehicle production has fallen 11.9pc to 417,232 units in the first half of this year. That included 385,810 cars, the SMMT said.
Production of cars did increase by 6.6pc in June although this was artificially boosted by factory outages last year.
Mr Hawes said the SMMT now expected annual production to remain below one million vehicles for the rest of the decade. Previously, the lobby group had predicted it would surpass that level again in 2028.
The last time one million vehicles were produced was 2023.
It means steep growth will be needed in the coming years to meet the Government's target of 1.3 million for 2035, announced as part of the recently-published industrial strategy.
'It's an ambition which we obviously share,' added Mr Hawes. 'But that's quite some ambition, from where we are to where we need to be.'
Hitting the target would require 'at least one, if not two' new car makers to open factories in Britain, he said.
Mr Hawes also welcomed new government grants worth up to £3,750 for consumers who buy EVs but warned that a lack of clarity around which cars will qualify had left manufacturers temporarily 'operating in a fog'.
The Government has confirmed that the price of eligible cars will be capped at £37,000, while manufacturers will have to show their vehicles meet a certain threshold for 'embedded carbon'.
They will also be asked to prove that, as a business, they are signed up to 'science-based' net zero targets that show how they plan to mostly eliminate their emissions over the next 25 years.
The combined effect of these requirements will probably be the exclusion of cars made in countries such as China and Korea although the outcome will not be known until car makers apply to the scheme.
The uncertainty surrounding the scheme is likely to depress car sales for the next month or so as companies wait to decide how many cars to sell - and at what prices - when taking the grants into account.
'You don't know whether your competitors are suddenly going to have a £3,750 price advantage on you,' Mr Hawes said.
At the same time, manufacturers are scrambling to hit sales targets set out under the Government's zero emission vehicle mandate.
The policy ostensibly says 28pc of cars sold in 2025 must be electric, before rising gradually to 80pc by 2030, although 'flexibilities' built into the scheme means the true requirement this year will be lower.
Car makers claim they are spending billions of pounds per year on price cuts to meet the requirements, as consumer demand for EVs fails to meet levels anticipated by the industry previously.
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