UK vehicle production fell by 11.6% in July as weaker overseas demand and earlier summer maintenance shutdowns reduced factory output.
The latest Society of Motor Manufacturers and Traders (SMMT) figures show 63,655 cars and commercial vehicles were built during the month.
Exports declined by 15.9% to 47,377 vehicles, with shipments to each of the UK automotive industry’s major overseas markets falling.
Car production was down by 10.6% at 61,767 units. Output for UK customers increased by 9.3%, but this was insufficient to offset a 15.8% fall in exported cars.
Shipments to the EU declined by 15.2%, while exports to the US fell by 17.7%. Deliveries to Turkey, China and Japan were down by 18.5%, 36.9% and 24.4% respectively.
Commercial vehicle production dropped by 34.4% to 1,888 units. Output for UK customers fell by 49.6%, while export volumes were 18.5% lower.
Electrified output returns to growth
Production of fully electric and hybrid cars increased by 6.8% to 25,678 units, marking the first monthly rise in electrified vehicle output this year.
Electrified models accounted for more than four in every 10 cars built in July, compared with around three in 10 during the same month last year.
UK factories produced just under 450,000 cars and commercial vehicles during the first seven months of 2026, down by 8.1% year on year.
The decline reflects factory model changeovers, the closure of a manufacturing plant last year and continued uncertainty surrounding trade and investment.
An independent outlook cited by the SMMT forecasts that UK car and light vehicle production will remain broadly stable at around 740,000 units this year before returning to growth in 2027.
Reforms needed to unlock investment
The SMMT said annual production could still reach one million vehicles by the end of the decade, but warned that this depended on securing new model investment and improving UK competitiveness.
It welcomed the government’s review of the zero emission vehicle (ZEV) mandate, arguing that reforms supported by stronger incentives could reduce the cost of selling electric vehicles in the UK and make the country more attractive to global manufacturers.
The industry body is also calling for further action on industrial electricity prices, which it expects to remain around 60% higher than in Europe despite the forthcoming British Industrial Competitiveness Scheme.
Trade with the EU presents another risk. The SMMT warned that the European Commission’s proposed “Made in the EU” measures could make UK-built vehicles less competitive, while tougher rules of origin under the EU-UK Trade and Cooperation Agreement are due to take effect in January 2027.
It said action was needed to protect cross-Channel automotive supply chains and an annual trading relationship worth €80 billion.
Mike Hawes, chief executive of the SMMT, said: “July’s figures underline the intense pressure under which UK vehicle manufacturers are currently operating. Although the negative performance is exacerbated by shutdown calendarisation and model changeovers, it is being compounded by weaker overseas demand and fierce global competition.
“The rise in electrified vehicle production is encouraging, but long-term success depends on making the UK a more competitive place to make and sell vehicles. Meaningful and urgent reform of the ZEV Mandate, reduction of the UK’s sky-high energy costs and negotiations to safeguard free and fair trade with our largest and closest export market are essential to put UK automotive manufacturing back on a path to growth.”
Commenting, John Cassidy, managing director of Close Brothers Motor Finance, said: “July’s fall in UK vehicle manufacturing is another reminder of the uncertainty facing the automotive sector. Growing competition from overseas manufacturers continues to apply trade pressure, while the transition to EVs and scepticism around the Government’s ZEV initiative further dampens output.
“For consumers, the picture remains positive, with new car registrations up by 11.7% annually. This continued momentum suggests that weaker manufacturing isn’t evidence of consumers stepping away from cars, but more accurately observed as a period of adjustment for the motor industry.”
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