US tariffs contributed to record drop in British car production

In the first six months of the year, production decreased by 11.9%, to 417,232 units compared to last year, according to the latest data published today.

"In terms of historical reference, it's not as bad as the impact of the Covid-19 pandemic, but if we exclude 2020, it's the worst first half of the year since 1953," SMMT CEO Mike Hawes told a group of journalists, including those from the Lusa news agency.

Uncertainty caused by the increase in trade tariffs on British vehicle imports in late March and early April to 27.5% disrupted exports to the US, the second-largest market.

"This 27.5% would be punitive for many small-volume, high-value manufacturers, for whom the US is the most important market, representing for some of them between a third and a half of their total production," the official explained.

Hawes considers the agreement negotiated by the British government, which reduces tariffs on British motor vehicles to 10%, a "diplomatic triumph".

The 10% tariff on the first 100,000 vehicles "is the new normal" and a favorable value compared to other agreements, such as the one announced between the US and Japan on Wednesday, which determined a 15% tariff on Japanese cars.

"We have a quota of 100,000 units, which practically covers what we exported last year, and we believe that, overall, it will cover what most manufacturers expect to produce this year. Therefore, we expect there won't be many exports outside the quota, which would result in higher costs," he stressed.

Of the vehicles produced in the UK, 77% are exported, of which 54% to the European Union, 16% to the USA and 7.5% to China.

Even at this reduced level of production, the sector continues to generate around £16 billion (€19 billion) annually.

The SMMT chief executive believes the British automotive industry has reached "its lowest point," as a result of several structural changes such as factory closures, the transition to electric vehicles, and international pressures.

An independent estimate cited by SMMT projects total production of 755,000 vehicles in 2025, a downward revision from the 818,000 estimated in April.

However, the British Motor Vehicle Manufacturers Association expects to surpass 800,000 units by 2026, but admitted that it will not be possible to return to one million vehicles before 2030.

Hawes praised the Government's "ambitious" target of seeing the industry produce 1.3 million vehicles by 2035.

But "given where we are and where we need to be, we clearly need at least one, and probably two, new manufacturers to start producing in the UK," he stressed.

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