SMMT said second-quarter output was broadly stable as exports improved, but warned high energy costs, EV rules, trade uncertainty and rising Chinese competition are straining investment and pricing.
UK vehicle production dropped 7.5% in the first half of 2026 to 385,979 units, with domestic output falling faster than exports as manufacturers faced trade uncertainty, weaker investment and intensifying competition from Chinese brands. The Society of Motor Manufacturers and Traders said second-quarter production was broadly stable, down 128 units, or 0.1%, from a year earlier, helped by stronger overseas demand. Exports accounted for 76.2% of all vehicles built in the period. Export output fell 5.6% to 294,222 units, while production for the domestic market slid 13.2% to 91,757 units. In June, total output eased 1.2% to 68,200 units after growth in May, as car exports rose 4.5% for a third consecutive month and commercial vehicle exports jumped 54.3% from a weak base. SMMT Chief Executive Mike Hawes said Chinese-branded vehicles now represent about 15% of UK new car registrations, led by SAIC Motor's MG, followed by BYD and Chery Automobile's JAECOO and OMODA marques. He said low-cost, good-quality Chinese EVs and plug-in hybrids are driving heavy discounting and putting manufacturers under "extraordinary pressure." The industry body warned Britain could miss future automotive investment unless it cuts energy costs, reforms electric vehicle regulations and secures favorable trading arrangements with the European Union.