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UK car and commercial vehicle production rose by 17.1% to
79,018 units last month, according
to the latest figures published today by the
Society of Motor Manufacturers and Traders (SMMT). Output
of cars, vans, trucks, taxis, buses and coaches increased
in comparison with a weak March last year, when
the earlier Easter break reduced working days
and significant model changeovers began to impact output.
Car manufacturing grew for the first time in 12 months,
driven by robust export demand that increased by 30.6%,
with almost three quarters (73.3%)
of output shipped overseas. Conversely,
production for the UK market fell by -6.1%. Electrified
vehicle production also rose, by 38.5% – more
than twice the rate of total production – to
31,661 units, to account for almost half of all UK car
output (45.0%).
The recent proposed revisions to the ZEV
Mandate have been welcomed by manufacturers,
evidence that government recognises some of the
challenges facing the industry, not least the absence of
robust consumer demand for EVs which is undermining
competitiveness. In addition, given the UK is a
significant producer of zero emission commercial
vehicles, particularly for the domestic market,
extensions to the grants for plug-in vans and trucks are
critical if this vital market is going to grow in
accordance with mandate ambitions.
The EU continued to be the largest destination for UK car
exports, accounting for 57.2% of all shipments. Ahead of
the introduction of new tariffs, the US remained the
second largest export market, comprising 15.0% of
exports, followed by China (8.5%), Turkey (2.7%) and
Japan (2.6%). Exports to all top five markets rose
for the month, with the EU up by 28.9%, the US 36.1%,
China 86.0%, Turkey 272.1% and Japan 91.8%.
CV production also rose, up by 8.2% to 8,700
units, in comparison with a weak March 2024 when volumes
were constrained by both Easter timing, and a softening
of output following 2023's post-Covid pent-up demand. As
in previous months, CV growth was driven by domestic
demand, which rose by 77.9% to 5,218 units. Conversely,
exports fell by -31.8% to comprise just 40.0% of
output. The EU remains the sector's largest
market by far, accounting for 94.2% of exports in the
month.
As a result, overall UK car production for Q1 2025 was
down slightly, by -3.2%, but with exports up 4.4%, while
CV output was down a more significant -27.1%, and exports
down by -50.3%. Given the figures reflect the level of
demand ahead of the announcements of new US tariffs,
manufacturers face considerable uncertainty heading into
quarter two as US demand likely weakens with knock on
effects on other markets and the supply chains. Trade
discussions must continue at pace to reach a deal that
supports jobs, demand and growth on both sides of the
Atlantic.
Increased protectionism and retaliatory tariffs being
levied in key markets mean a rapid response from
government is needed, given the immediate challenges
facing the industry's exports. It is also essential the
UK does all it can to assure its longer term production
competitiveness. Industry looks ahead to the
comprehensive industrial strategy, due before the
summer, which must have automotive and advanced
manufacturing at its heart, and set concrete measures
that support the growth of Britain's most valuable goods
export industry.
Mike Hawes, SMMT Chief Executive,
said, “A March uplift to manufacturing is
overdue good news, although the performance was
boosted by a comparatively weaker month last year, when
holiday timings and product changeovers combined to
reduce output. With
the last quarter showing
demand for British-built cars rising overseas, navigating
the new era of trade uncertainty is now the major
challenge. Government has rightly recognised automotive
manufacturing's critical role in Britain's export economy
and must now show urgency and creativity to deliver a
deal that supports our competitiveness, spurs domestic
demand for the latest cleanest vehicles, and helps
factory lines flourish.”
The latest independent outlook – compiled ahead of
rapidly changing trading conditions with the US -
estimates that light vehicle production will fall -7.8%
in 2025 to 818,200 units, before rising slightly by 1.2%
in 2026 to 827,700 units. With a favourable government
strategy, however, this could rise to 834,900 units and
set the industry on the path for further growth.
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