UK Car Manufacturing Hits 70-Year Low Amid EV Shift
The UK car industry faces a critical turning point. Car production in 2024 hit its lowest level in seven decades—excluding the pandemic year—with only 780,000 units manufactured. The sector struggles against weak global demand and challenges associated with the transition to electric vehicles (EVs). For comparison, Britain’s car production last fell this low in 1954, a time when wartime rationing had just ended.
The decline comes as the industry wrestles with production pauses to retool factories for EV production, alongside slower-than-expected growth in EV sales. Yet, there are glimmers of hope, as carmakers strive to find new momentum amidst challenges both at home and abroad.
A Steady Decline and Its Underlying Causes
The UK automotive sector has seen its outputs dwindle over the years, but 2024 brought exceptionally jarring results. Factors such as weak demand, economic uncertainties, and the fierce competition from global manufacturers have been contributing to the decline. The figures, according to the Society of Motor Manufacturers and Traders (SMMT), also reflect a shift in production strategies. Carmakers paused operations to modernise factory lines for zero-emission EV production, diminishing total output for the year.
The manufacturing drop comes following Vauxhall owner Stellantis’ 2021 decision to shift its Ellesmere Port plant in Cheshire to van production instead of cars. This move significantly skewed the metrics. If vans are included, the industry churned out 905,000 vehicles in total for 2024. Still, this was a 12% drop compared to 2023.
Nissan retained its lead as the UK’s largest car manufacturer, despite a 13% production decline at its Sunderland plant. Jaguar Land Rover (JLR), owned by India’s Tata Motors, trailed as the second-largest. JLR saw record revenues of £7.5bn in the final quarter of 2024 but acknowledged they operate in a “challenging economic backdrop.”
Transitioning to Electric Vehicles
The shift to EVs marks a significant transformation but also a tumultuous phase for British carmakers. Jaguar Land Rover, for example, paused all Jaguar production in 2024 for an all-electric brand relaunch, contributing to the production slowdown.
Mike Hawes, chief executive of SMMT, noted that 2024 was a transition year. Factories reconfigured their lines to meet the UK government’s zero-emission vehicle (ZEV) mandate, which obliges carmakers to increase electric car sales yearly. However, the industry faces another hurdle—a slower rise in EV adoption than anticipated.
To ease the pressure, the UK government is reportedly considering offering loan guarantees to stimulate EV demand. If implemented, these subsidies could also help manufacturers meet the ZEV mandate. Hawes, while welcoming the potential support, warned that subsidies would need to be “substantial” to have a significant impact.
The government’s tight EV policies, alongside tariffs on vehicles, could further complicate matters for carmakers. Industry leaders are hoping the ZEV requirements may be relaxed to give manufacturers more breathing room.
Historical Context and the Global Picture
To understand the current predicament, it helps to step back in time. The UK’s output in 1954, at a similarly low level, was dominated by the British Motor Corporation—created from the merger of the Morris and Austin brands. Back then, car buyers had limited options, compared to today’s global array of advanced vehicles.
Now, amid global competition, the UK faces significant challenges to retain its place as a leading car exporter. Exports to the US, the UK’s second-largest market, may be hit by tariffs tied to Donald Trump’s trade policies. However, luxury carmakers hope their clientele will tolerate price hikes.
Broader Implications for the UK Auto Industry
While the shift to greener technologies positions UK manufacturers as pioneers, the road ahead is laden with uncertainties. Analysts forecast that car and van production may not exceed one million units annually until 2028. This projection underscores how far the sector has drifted from its ambitious 2017 target of producing two million vehicles annually.
Adding to the uncertainty is Brexit’s lingering aftershock. Political volatility has led to plant closures in recent years, with Stellantis announcing the closure of its Luton van factory in late 2023.
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