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UK car and commercial vehicle production fell by a staggering 32.8% in May 2025, dropping to just 49,810 units – the lowest May figure since 1949, excluding the pandemic-affected 2020. This marks the fifth consecutive month of declining production, bringing the year-to-date total to 348,226 vehicles, down 12.9% from 2024 and representing the weakest performance since 1953.

• Car production alone fell 31.5% to 47,723 units
• Commercial vehicle output fell 53.6% to 2,087 units.

The primary catalyst for this crisis has been the trade war initiated by the US Trump administration, which imposed punitive 25% tariffs on UK-made vehicles in March 2025, resulting in a 55.4% fall in UK automotive exports in May alone. 

A few hours ago, the White House has announced its intention to drop President Donald Trump’s proposed ‘revenge tax’ (Section 899) following concerns it could have harmed UK businesses, with US Treasury Secretary Scott Bessent announcing the measure’s removal from Trump’s legislative package. The tax would have allowed America to impose retaliatory levies on companies from countries that unfairly taxed US firms, potentially affecting many FTSE 100 companies with transatlantic operations. 

Chancellor Rachel Reeves has welcomed the decision after raising concerns with G7 counterparts, whilst the US has secured an agreement that American companies will be exempt from the new OECD global minimum tax regime.

The US, second only to the European Union (EU) as a destination for UK vehicle exports, saw its share fall from 18.2% to just 11.3% in a single month.

The SMMT noted that these tariffs “depressed demand instantly, forcing many manufacturers to stop shipments”. The luxury car sector, which forms the backbone of UK automotive exports to America, bore the brunt of this assault; Jaguar Land Rover, the UK’s largest automotive employer and biggest exporter to the US, was forced to temporarily suspend all shipments, and Aston Martin has significantly slashed shipments too.

But the picture of a troubled UK automotive sector extends beyond the Atlantic. Exports to the EU, still Britain’s largest single market despite Brexit, fell by 22.5%, emblematic of friction in post-Brexit trade agreements. Exports to China declined by 11.5%, and to Turkey by 51%.

Domestic market struggles exacerbate weaknesses

While export production fell by 27.8%, domestic market production fell by an even steeper 42.1%. This meant that exports now comprise 78.5% of UK vehicle production: a dangerously high dependency on foreign markets at a time when international trade relationships are increasingly volatile.

The domestic market weakness suggests that UK consumers are also pulling back from vehicle purchases, potentially due to economic uncertainty, high interest rates, or the challenging transition to electric vehicles (Jaguar Land Rover is shifting Jaguar to an all electric line, and others are transforming their production lines to accommodate electric powertrains, leading to temporary production pauses and supply chain complications).

The commercial vehicle segment has been particularly hard hit, with production falling 53.6% to just 2,087 units. This collapse reflects the closure of the Stellantis factory in Luton, which manufactured vans for the Vauxhall brand for 120 years before shutting in March 2025, affecting approximately 1,200 workers.

Commercial vehicle exports fared even worse, declining by 71.7% year-on-year. While the EU remains the dominant market for UK commercial vehicles, accounting for 94.7% of exports, volumes to the continent fell by 72.1%. This has fundamentally altered the sector’s dynamics, with the domestic market now becoming the primary destination for UK commercial vehicle output for the first time in years.

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The first car with an internal combustion engine was built in 1890s Britain. Since, the automobile industry has only grown more vital, with £93 billion in annual turnover and 813,000 jobs across the wider automotive sector, and premium brands including Rolls-Royce, Jaguar, and Land Rover. The coming months will be crucial in determining whether this crisis represents a temporary setback or a fundamental restructuring of the UK’s automotive landscape.

On Monday, 23 June, the UK government responded to the crisis with its new Industrial Strategy, which recognises the automotive sector’s critical role in driving economic growth. The strategy includes provisions for addressing punitive energy costs that have constrained UK manufacturing competitiveness, along with a £2.5 billion automotive capital and research and development fund.

On a positive note, the UK and US have negotiated a new trade agreement that will reduce tariffs on up to 100,000 British vehicles annually from 25% to 10%. While still significantly higher than the pre-tariff rate of 2.5%, this arrangement offers a pathway to recovery for UK manufacturers.

As such, Aston Martin announced it would resume shipments to the US after a three-month pause. The agreement covers roughly the same number of vehicles that the UK exported to America in 2024.

Mike Hawes, SMMT Chief Executive, said, “While 2025 has proved to be an incredibly challenging year for UK automotive production, there is the beginning of some optimism for the future. Confirmed trade deals with crucial markets, especially the US and a more positive relationship with the EU, as well as government strategies on industry and trade that recognise the critical role the sector plays in driving economic growth, should help recovery.”