The collapse of critical UK automotive suppliers could disrupt vehicle production, restrict future model choice and weaken the investment plans on which dealer networks depend, the SMMT is warning.
A new Society of Motor Manufacturers and Traders report says rising costs, lower production volumes and uncertainty around future vehicle programmes are putting important component manufacturers under increasing financial pressure.
Some suppliers reported that parts of their businesses are running at around half capacity, pushing up the cost of each component and limiting their ability to invest in equipment, skills and productivity.
For dealers, the downstream risk is that supplier failures could affect production schedules, model launches and vehicle availability, particularly where manufacturers rely on components delivered just in time and in assembly line sequence.
Supplier failures threaten output
The SMMT said insolvencies among UK vehicle and component manufacturers increased by approximately 180% between 2016 and 2025, compared with growth of around 63% across all UK businesses.
The pressure extends beyond companies specialising in electric vehicle technology. Suppliers producing seats, cockpit modules, plastic trim, pressings and castings used across different powertrains are also at risk.
Losing these businesses could make the UK less attractive when global manufacturers decide where to allocate future vehicle programmes, potentially reducing the number of UK-built models available through dealer networks.
However, the SMMT identified £6.4 billion in expected annual manufacturer spending on priority components by 2030 that could support UK suppliers if they remain commercially competitive.
The figure includes components already sourced domestically and therefore does not represent £6.4bn of entirely new business. Future spending will also depend on vehicle programmes, market conditions and UK suppliers’ ability to compete.
SMMT seeks £130m intervention
The industry body is calling for a national Automotive Productivity Accelerator offering £100 million in capital grants for automation, robotics, artificial intelligence and digitalisation.
It also wants £25m allocated to skills and a £5m match-funded programme helping automotive suppliers diversify into the aerospace and defence sectors.
Further recommendations include dedicated tooling finance, support for components used across every powertrain and action to reduce energy, employment and business rates costs.
The SMMT also called for a workable ZEV mandate, UK participation in the EU’s proposed Made in Europe measures and changes to UK-EU rules of origin to protect tariff-free trade.
Mike Hawes, SMMT chief executive, said: “Britain cannot afford to lose the suppliers that make vehicle manufacturing here possible. Once their skills, tooling and expertise are gone, investment becomes harder to win – and far harder to bring back.
“The opportunity to reshore component spending in Britain is real, but we cannot take it for granted. Industry must improve productivity and work to secure critical capability, matched by government action on energy costs, market access and targeted investment support. Backing suppliers is not just about protecting today’s jobs, it is about securing Britain’s place in the next generation of vehicle manufacturing.”
The UK automotive industrial base includes more than 2,500 supply-chain businesses and supports 188,000 manufacturing jobs.
The report drew on manufacturer sourcing submissions and work with 26 suppliers representing £1.2bn in turnover and 8,500 employees. Manufacturer data was collected through the SMMT’s chief procurement officer forum, representing 99% of UK passenger car manufacturing.
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