With just 780,000 cars produced, UK car output dropped to its lowest point in seven decades in 2024. Except for the epidemic’s effect when manufacturing closures and supply chain interruptions, such as shortages of computer chips, caused significant setbacks, this number is the lowest since 1954. The Society of Motor Manufacturers and Traders (SMMT) claims that manufacturers stopping output from retooling factories for electric vehicle (EV) production accounts for declining UK automobile production and sluggish demand.
Why is UK car manufacturing suffering even with technological developments?
The booming worldwide automobile market, where consumers have access to an incredible spectrum of technologically superior vehicles, contrasts dramatically with the 2024 production downturn. The UK automotive sector has struggled to keep its place as a key automobile manufacturing base, nonetheless, as competition rises. The fact that the biggest automakers in the UK focus on electric vehicle manufacture aggravates the difficulties. As observed with various manufacturers, including Jaguar Land Rover (JLR), who stopped manufacturing its Jaguar brand in readiness for its all-electric relaunch, this change has resulted in factory pauses and alterations.
“Manufacturers pausing while they switched to electric production helped to explain the drop in UK car output last year,” said Mike Hawes, Chief Executive of the SMMT. “The industry is still suffering with slower-than-expected growth in electric car sales and weak worldwide demand though.”
How affected output figures were by changes in production?
The choice of Stellantis, the owner of Vauxhall, to change manufacturing at its Ellesmere Port facility from cars to vans in 2021 also impacted the declining output figures. Including vans in the overall output, the UK sector generated 905,000 vehicles by 2024. Still, this shows a 12% drop from 2023. Retooling facilities for the production of electric cars has further delayed output across various manufacturers, most notably JLR, whose stop in Jaguar production signalled a significant change in the company’s approach towards electric cars.
“We are in a cyclical mode and right now we are more toward the low end of that transition,” Hawes said.
Still, the biggest car manufacturer in the UK is Nissan.
Nissan remained the most prominent car manufacturer in the UK despite a general drop in automobile output. At its Sunderland plant, though, output decreased 13%. This aligns with more significant industry trends whereby companies like JLR are changing their production techniques to give more priority to electric vehicles. Owned by Tata from India, JLR declared record earnings of £7.5 billion for the last quarter of 2024, together with the most significant profits in a decade. However, the business was also cautioned that a “challenging economic backdrop” could influence future performance.
How Might Trade Policies and Tariffs Affect UK Vehicle Manufacturers?
If taxes are applied mainly on imports into its second-largest market, the United States, the UK car sector will be preparing for more upheaval in 2025. Given that many of the vehicles the UK exports are luxury models, which could still see demand despite the extra cost, there is increasing worry about potential tariffs facing the country.
Mike Hawes responded to the approaching threat of these tariffs, pointing out that the automotive sector of the United Kingdom wishes to avoid such taxes. ” Many of our exports are luxury cars whose buyers may be ready to absorb a tariff on top of the import price,” he said.
How Might UK Government Policies Shape Industry Future?
Among these hurdles, there are expectations in the UK automobile industry that government initiatives could help to ease some of the problems. The SMMT has indicated interest in loosening rules around the zero-emission vehicle requirement, which mandates that carmakers sell rising quantities of electric vehicles yearly. Government-backed loan guarantees also exist to boost demand for electric cars and assist producers in reaching these new benchmarks.
Hawes underlined that any possible subsidies or assistance program had to be “substantial” to benefit the sector truly. “We need major help to help negotiate this transition and boost demand for electric cars,” he stated.
What is ahead for UK car manufacturers?
It appears far-fetched for the UK to become a high-volume vehicle producer once again. Forecasts ready for the SMMT indicate that the UK may not reach the one million milestone in car and van manufacture until 2028. This is far from the 2 million target the sector set so recently in 2017. Years of political instability resulting from the Brexit vote and the epidemic have further hindered the UK car industry, resulting in plant closures and changing company priorities.
November 2023 saw one of the most noteworthy disturbances when Stellantis revealed intentions to shut its van manufacturing in Luton, therefore highlighting the volatility the UK’s automotive industry was experiencing.
The future of UK vehicle manufacture is yet unknown as the country moves toward electric cars and negotiates the changing worldwide automotive scene. The UK’s automobile sector finds a crucial junction with less demand, electrification difficulties, and new trade restrictions.
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