UK half-year vehicle production down 7.5%, industry sees signs of optimism

By Ankita Bora and Muvija M

LONDON, July 30 (Reuters) - UK vehicle production fell 7.5% in the first half of 2026 amid trade uncertainty, the Society of Motor Manufacturers and Traders said on Thursday, though it added there were signs of optimism under new Prime Minister Andy Burnham.

Despite a challenging start to the year, output stabilised in the second quarter, dipping by just 128 units, or 0.1%, from a year earlier thanks to stronger exports, the industry body's statement said.

"We have a new prime minister, we have a new cabinet, and what we are seeing is a bit more optimism than perhaps we've seen before, and that kind of reflects where the market is," SMMT CEO ​Mike Hawes told reporters at a briefing in London.

"Clearly vehicle production is still under severe pressure, but the last quarter suggests a sign of at least stabilisation."

Half-year vehicle production came in at 385,979 units, with output for export down 5.6% at 294,222 units from a year earlier. Production for the domestic market dropped 13.2% to 91,757 units.

The SMMT warned that Britain risked losing future investment without "urgent" action to cut energy costs, reform electric vehicle regulations and secure favourable trading arrangements with the European Union.

June output slipped 1.2% to 68,200 units, following growth in May, as car exports rose for a third straight month, up 4.5%, and commercial vehicle exports jumped 54.3% from a weak base.

Year-to-date, exports accounted for 76.2% of all vehicles built, underscoring the sector's dependence on international trade. The EU remained the biggest export market, taking 58.3% of car shipments, followed by the United States and China. 

Carmakers are racing to meet Britain's annual electric vehicles targets but say the effort is driving costly discounts and increasing compliance expenses, while stricter EU trade rules scheduled to take effect from 2027 are set to add further pressure on the industry.

The industry's latest outlook forecasts UK car and light vehicle production will remain broadly flat at around 740,000 units in 2026 before returning to growth in 2027, the SMMT said.

(Reporting by Ankita Bora in Bengaluru and Muvija M in London; Editing by Diti Pujara)