British car production has hit its lowest point in over four decades, with automakers grappling with a drop in demand and mounting challenges. Calls for the government to ease electric vehicle (EV) targets are growing, as industry leaders warn of potential factory closures and job losses.
Just 64,216 cars were produced in the UK last month, a 30% decline compared to the same period last year, according to the Society of Motor Manufacturers and Traders (SMMT). This marks the worst performance since 1980, a time when the UK faced economic turmoil and industrial strikes.
While all major automakers in the UK have seen production drop, the EV sector has been hit particularly hard, with output falling by nearly 46%. So far this year, total car production is down 13% compared to 2023, with 734,562 vehicles manufactured.
'These figures offer little Christmas cheer for the sector" said SMMT chief Mike Hawes.
"While a decline was to be expected given the extensive changes underway at many plants, manufacturing is under pressure at home and abroad,"
"Government can help by supporting consumers in the transition, fast tracking its Industrial Strategy for advanced manufacturing and, most urgently, reviewing the market regulation which is putting enormous strain on the sector."
Recent months have seen major disruptions in the British automotive industry. Stellantis announced it would shut down its Luton van factory, threatening 1,100 jobs. Ford has also revealed plans to cut 800 jobs over the next three years, reducing its UK workforce of 5,300.
These challenges come amid tensions between automakers and the government over the Zero Emission Vehicle (ZEV) Mandate, which requires carmakers to hit annual EV sales targets. The mandate demands that EVs account for 22% of car sales in 2024, increasing to 80% by 2030. Companies failing to meet these targets face hefty fines.
Automakers have been vocal about the ZEV Mandate, arguing that sluggish consumer demand for EVs makes the targets unrealistic. Labour has pledged to reinstate the ban on new petrol and diesel cars by 2030, while the current government has delayed this deadline to 2035, with some hybrids allowed until 2040.
Business Secretary Jonathan Reynolds recently admitted the ZEV Mandate was "not working as anyone intended’, hinting at changes to ease the strain on manufacturers. However, any announcements are now expected in the new year.
It’s not just the UK. German automaker Volkswagen is facing worker strikes over plans to close factories and cut wages. Audi recently announced the closure of its Brussels EV factory, citing weak demand. Ford is scaling back production of its new EV models, including the Explorer and Capri, due to low orders.
Meanwhile, competition from China is ramping up. Backed by government subsidies, Chinese carmakers dominate their domestic market and are now expanding globally, challenging established brands.
With falling EV demand and increasing competition, the future of car production in the UK and abroad remains uncertain. The industry faces a tough road ahead as it navigates these challenges.
