UK Auto Industry Faces a 17.7% Production Decline as Demand Weakens

The UK automotive sector saw a 17.7% production drop in January 2024, with SMMT citing weak demand in key markets. EV output slightly rose, but challenges remain. Read the full report.

The UK’s automotive sector is under mounting pressure, with vehicle production plunging 17.7% year-on-year in January 2024. According to the Society of Motor Manufacturers and Traders (SMMT), only 71,104 passenger cars and 6,908 commercial vehicles rolled off British production lines during the first month of the year.

Key reasons behind the slump include weakening demand in major export markets—the EU, China, and the UK itself—as well as ongoing global trade uncertainties. However, despite the downturn, the production of electrified vehicles (EVs, hybrids, and plug-in hybrids) rose by 1.5%, reaching 30,028 units, accounting for more than 42% of total output.

The decline in vehicle production is not only affecting manufacturers but also consumers. A shortage of new cars has pushed up prices for used vehicles, following a trend seen in previous years. Industry analysts report that average lead times for new cars reached 43 weeks in 2023, and these delays are expected to persist.

To sustain the industry and accelerate the EV transition, the UK government has allocated £4.5 billion to support advanced manufacturing facilities. However, experts warn that this may not be sufficient: private demand for EVs remains sluggish, with just 10% of new electric car sales coming from private buyers. This raises concerns about meeting the government’s ambitious 80% EV sales target by 2030.

As the UK competes with European markets, it must strike a balance between electrification investments, industry support, and consumer demand. If production levels fail to recover in the coming months, Britain risks losing its foothold in the global automotive industry.