The UK automotive industry finds itself at a crossroads.

According to new data from the Society of Motor Manufacturers and Traders (SMMT), overall car and van production in the first half of 2025 dropped by 12% compared to 2024.

It represents the steepest decline in output since 1953 outside the pandemic.

Slowing down

A total of 417,232 vehicles were built, with car production falling 7.3% and commercial vehicle output plummeting 45.4%, primarily attributed to Stellantis’ closure of the Vauxhall Luton plant.

“It’s the worst performance, outside of the Covid pandemic, since 1953,” said SMMT chief executive Mike Hawes, who cited global economic uncertainty and trade protectionism as key pressures.

While June saw a 6.6% rebound, the SMMT forecasts the full-year drop in output could reach 15%.

Despite this, hope remains: UK vehicle manufacture remains heavily export-oriented, with 76.9% of production shipped overseas—mainly to the EU (54.4%), followed by the US (15.9%) and China (7.5%).

The economic impact of the recent UK-US trade deal, which reduced tariffs as of June 30, could help bolster future exports.

Rise of the EV 

Where manufacturing struggles, electric vehicle uptake continues to surge.

The SMMT reports that over 1.3 million battery-electric vehicles (BEVs) will be on UK roads by the end of 2024—marking a 38.9% year-on-year increase—bringing plug-in EVs to nearly 4.4% of the 34 million-car parc.

EV market share is also rising sharply. In the year-to-date period, BEVs made up around 21% of new car registrations, with 177,487 EVs sold.

In April 2025, BEVs accounted for 20.4% of new registrations—a solid rise from 16.9% in April 2024.

Electric vehicles are no longer confined to short trips.

The RAC Foundation reports that new BEVs under three years old were driven an average of 10,054 miles in 2024, nearly matching diesels at 10,728 miles, driven by data from over 1.2 million MOT tests.

This parity underscores the growing appeal of EVs as dependable long-haul alternatives.

From the East

Parallel to domestic shifts, Chinese EV brands are making inroads.

As of May 2025, Chinese-made cars accounted for 9.4% of UK vehicle sales—up from 5.5% a year earlier.

BYD led the growth with a 400% surge in annual sales, and others, such as Polestar, MG, Omoda, and Jaecoo, have also seen strong uptake.

In April, Chinese EVs captured 8.9% of EV sales in Western Europe—the highest since mid-2023.

Globally, Chinese brands held 62% of EV sales in 2024.

Domestically, Jaecoo and Omoda recently outsold Tesla UK in April, moving 1,053, 910, and 512 units respectively.

UK consumers are also seeing pressure on EV pricing.

Chinese brands like Leapmotor have reduced prices to match UK EV grants, with models like the To3 and C10 priced under £33,000.

Meanwhile, BYD launched its Dolphin Surf compact EV at £18,650, set to compete directly with European rivals.

Challenging road ahead

UK vehicle makers were also impacted in Q1 2025, with electrified vehicle output growing by just 1.8%, accounting for 41.5% of the UK’s manufacturing output, despite a 11.9% decline in total production.

Such shifts mean UK manufacturers must balance declining ICE volumes with electrification and confront fierce imports.

The government’s recent £650 million EV grant aims to stimulate demand, though its restrictive eligibility criteria have drawn criticism.

Mike Hawes remains cautiously optimistic: “Our engineering excellence, highly skilled workforce and global reputation are strengths… With rapid delivery and the right conditions, UK Automotive can reverse the current decline”.

New roads

The UK automotive landscape is undergoing profound change: traditional manufacturing is facing sharp declines, while ownership and use of EVs — especially high-mileage BEVs — are rising significantly.

Chinese brands are gaining market share through affordability and innovation, intensifying competitive pressure.

Whether the UK industry can pivot successfully depends on accelerating EV manufacturing, securing investment, and positioning itself amid global competition and shifting consumer demand.