Fewer cars rolled off UK production lines in February in what the industry called an “extremely worrying” slump even before the impact of the Iran war was felt.
Vehicle production was 17% lower last month on the same period in 2025, according to the Society of Motor Manufacturers and Traders, as exports dropped sharply.
A further decline is expected in March, after the war sent global energy prices soaring and further dented consumer demand, a double blow for carmakers.
Mike Hawes, chief executive of the SMMT, said: “Another decline for UK vehicle production and exports is extremely worrying, given these figures pre-date the crisis in the Middle East. While the sector has made efforts to build resilience into its logistics and supply chains post-Covid, the conflict adds further strain.”
The firms manufacturing in Britain export 81% of the cars they make, with the EU accounting for the largest share, followed by the US and China. While exports to the EU rose by 5%, those to the US fell 34% and to China plunged 66%, contributing to an 12% overall drop in exports.
Cratering demand in China, where domestically made competitors are booming, as well as Donald Trump’s tariffs in the US, have put UK carmakers under pressure in the two key markets.
Production of battery-electric, plug-in hybrid and hybrid cars also fell by 3% to 26,629 units, though they accounted for 40% of total output.
Manufacturers were already under pressure. UK vehicle production hit its lowest point since 1952 last year, excluding Covid lockdowns.
The chill engulfing the industry stands in stark contrast to Labour’s aims to have 1.3m vehicles a year manufactured by 2035, a central ambition of its industrial strategy, nearly double the 764,715 cars and vans made in 2025.
Nissan has said it may have to close its factory in Sunderland if proposed EU ‘Made in Europe’ manufacturing rules are introduced. Photograph: Christopher Thomond/The Guardian
While European sales have been more resilient, those could also take a hit this year if the UK was not fully included in new “Made in Europe” manufacturing rules proposed by the EU, the SMMT warned earlier this month.
The Japanese carmaker Nissan has said it could be forced to close its plant in Sunderland as a result of the proposals, which bosses say could damage the £70bn-a-year cross-channel trade.
The Sunderland site, Britain’s biggest car factory, employs 6,000 people and has the capacity to produce 600,000 vehicles a year. However, output is well below that level due to weaker demand.
“Governments must work together to extend full, trusted partner status to the UK automotive sector to ensure choice and affordability for consumers, particularly of zero emission vehicles, on both sides of the Channel,” the SMMT said on Friday.
Volkswagen, Europe’s biggest carmaker, underlined the risks for automotive workers recently when it said it would shed 50,000 jobs this decade amid falling sales in China and Trump’s tariffs.
Emily Sawicz, an analyst at RSM, a consultancy, said the industry was at “crisis point”, adding that the war in the Middle East would only make things worse by pushing up energy prices and disrupting supply chains for key materials such as aluminium.
