UK vehicle production reached one million units in 2023, marking the first time since pre-Covid 2019, as major car manufacturers invested billions in electric vehicles (EVs), propelling the UK "back in the game," stated the Society of Motor Manufacturers and Traders (SMMT) today.
SMMT chief Mike Hawes described the total of 1,025,474 (905,117 cars, 120,357 commercial vehicles; up 17% year on year) as a "surprise," especially considering the supply chain challenges faced by car makers in 2023. Hawes mentioned that shipping issues in the Red Sea, caused by Houthi militia ship attacks, are expected to pose additional challenges soon.
Despite the unexpected success, SMMT anticipates a decrease in car production in 2024. However, a boost from commercial vehicle manufacturers, including Vauxhall and its upgraded Ellesmere Port factory, is projected to elevate overall production to 1.04 million units. The SMMT also foresees obstacles in 2024, such as shipping issues and car makers like JLR transitioning from internal combustion engine (ICE) production to EVs, preparing their factories for an electric future, and compliance with the ZEV mandate.
"We are in a much better position than a year ago, but the challenges are unrelenting," emphasised Hawes.
The last-minute postponement of the rules of origin agreement, a week before implementation, has further hindered early-year production. This legislation, now scheduled for 2027, imposes restrictions on the sourcing of parts for electric cars, with tariffs for non-compliance.
"The first few months of EV production will be volatile as many manufacturers would have bet on the rules of origin deal not happening," explained Hawes. EVs remain a focal point for the SMMT, and Hawes has urged the government to reduce VAT on electric car purchases, similar to incentives provided to fleet buyers.
"We need to increase the demand for EVs to make them a more attractive proposition," he asserted.
The call for EV incentives follows over £23.7 billion in investment from government funds and companies like Tata, JLR, Vauxhall, and Nissan, signaling that the UK is "back in the game" after being considered "nigh-on 'uninvestable'" in recent years, according to Hawes.
However, he cautioned against complacency, emphasising the need to turn investments into tangible developments and remain competitive amid global challenges and geopolitical tensions.
Hawes reiterated the importance of boosting private EV adoption in the UK to attract future investments: "We need to have a strong domestic market for electric cars. Otherwise why [would manufacturers and investors] come here and not go to the EU? ... The government can help with that."
In 2023, exports remained the dominant market for the UK, with 713,870 vehicles shipped overseas, compared to 191,247 for domestic registrations. Nissan led in domestic production, with 324,893 units, followed by JLR (238,422), Mini (184,996), Toyota (122,193), and Bentley (12,859).
