UK car production in May 2025 declined to its lowest level since 1949, with only 49,810 vehicles manufactured, according to the Society of Motor Manufacturers and Traders (SMMT). The significant drop, nearly one-third from the previous year, is attributed to the impact of U.S. tariffs on exports, prompting major manufacturers to reevaluate shipments.
Production Decline and Export Issues
The latest figures from the SMMT indicate that last monthโs output was the lowest for May in 76 years, excluding the disruptions caused by COVID-19 pandemic lockdowns. The sharp decrease in vehicle production is largely due to a dramatic reduction in exports to the United States, where shipments have declined by 50% following the imposition of a 25% tariff by the Trump administration in March. This tariff significantly โdepressed demand, instantly forcing many manufacturers to halt shipments,โ the SMMT stated.
Major manufacturers, such as Jaguar Land Rover (JLR) and Aston Martin, have felt the brunt of these tariffs. JLR suspended its exports to the U.S. in April, while Aston Martin scaled back its shipment volumes, leading to a dramatic fall in the U.S. share of UK car exports from nearly 20% to just over 10% in May.
Transitioning to Electric Vehicles
In addition to tariff-induced challenges, UK car production is also experiencing strain from ongoing transformations towards electric vehicle (EV) manufacturing. The SMMT noted that many manufacturers are in the process of retooling their factories for electric vehicle production. JLR is transitioning to an all-electric Jaguar brand, while Nissan prepares for the launch of a new Leaf model.
Potential Relief on Tariffs
Despite these setbacks, there is a glimmer of hope as the U.S. and UK have reportedly reached an agreement to reduce import tariffs on up to 100,000 British vehicles per year from 25% to 10%. This deal is expected to take effect before the end of June 2025. However, any exports exceeding this quota will incur a hefty 27.5% tax, raising concerns for the sustainability of recovery efforts.
Industry Perspectives
Mike Hawes, SMMT Chief Executive, expressed cautious optimism, acknowledging that while 2025 has presented โincredibly challengingโ conditions for the automotive industry, there are reasons to look forward. He emphasized the importance of trade agreements with key markets, including the U.S., India, and the EU, as well as supportive UK government strategies on industry and trade.
Moreover, he pointed out that the recent UK industrial strategy introduces initiatives for lower energy costs for manufacturers alongside a ยฃ2.5 billion automotive capital and research and development fund, aimed at bolstering the industryโs resilience.
Conclusion
As the UK car industry grapples with unprecedented challenges from tariffs and the shift towards electric vehicles, the forthcoming tariff reductions may offer a brief reprieve, potentially positioning the sector for gradual recovery. The SMMT remains focused on supporting manufacturers through these turbulent times and fostering conditions for growth and innovation in the automotive landscape.
