September production rebounds sharply
According to figures released on 29 October by the Society of Motor Manufacturers and Traders (SMMT), UK vehicle production increased 36.3% year on year to 74,031 units, its strongest growth since August 2022.
Car production climbed 38.6% to 70,831 units, marking the strongest September performance since 2023. The European Union remained the largest export destination, accounting for 57.5% of car shipments, with exports to the bloc increasing 12.7%. Shipments to the United States surged 234.8%, while exports to China rose 357.7%, albeit from a low base.
However, the monthly improvement has not erased the broader decline. Combined car and commercial vehicle production fell 3% year on year to 564,537 units during January-September 2026.
EU trade rules raise concerns
The proposed EU ‘Made in Europe’ measures have emerged as a major concern for British manufacturers. The plans would favour European-made goods in public procurement, auctions and subsidy schemes covering electric vehicles, batteries and other clean technologies. UK manufacturers fear that exclusion could weaken their access to a crucial market.
From 1 January 2027, stricter rules of origin under the UK-EU Trade and Cooperation Agreement will add to the pressure on carmakers. To qualify for preferential tariffs, vehicles must meet requirements on how much of their value comes from the UK and EU.
The UK and EU are discussing possible solutions, but uncertainty remains. Manufacturers are also concerned that the UK’s electric vehicle sales mandate is setting targets ahead of consumer demand, putting additional pressure on resources and jobs.
Production outlook remains uncertain
Despite the September rebound, an independent industry forecast expects UK light vehicle production to fall 2.3% to 731,000 units in 2026 before rising to 752,000 in 2027, as new models, mainly electric vehicles, enter production.
There are signs of continued investor confidence. More than £1 billion in automotive investment was announced in September, including commitments involving McLaren, Nissan and Bentley. However, manufacturers want greater certainty over trade arrangements and regulations before committing further resources.
On 27 October, UK Business Secretary Jonathan Reynolds said discussions with the EU were continuing to address concerns over the proposed rules. A possible compromise could depend on Britain aligning with the bloc on tariffs on Chinese goods. The proposals still require approval from EU governments and the European Parliament.