British Vehicle Manufacturing Decline Hits 70-Year Low

British Vehicle Manufacturing Decline Hits 70-Year Low

In the year 2025, the U.K.'s new-vehicle production has faced significant challenges, with factory disruptions, new U.S. tariffs, model changeovers, and weakening demand in export markets taking a toll. As a result, production volumes have seen a sharp decline, with a 32.8% year-on-year drop in May 2025[1][2].

Despite these setbacks, the U.K. government has taken proactive steps to boost manufacturing capacity and export competitiveness over the medium term. An industrial strategy has been introduced, focusing on investments in battery plants, semiconductors, R&D, regulatory reforms, energy cost reduction, and international trade deals[1].

Meanwhile, the used-car market in 2025 has been influenced by a different set of factors. While specific price data for used cars is not directly available, changes in new car registrations and consumer behaviour are likely to play a significant role. New car registrations stalled with a 5% decline in July 2025 due to uncertainty over eligibility for new Electric Car Grants (ECG), causing some buyers to delay purchases[3][4][5].

The stalling of new car sales, coupled with a modest overall market growth, suggests that used car prices could remain elevated or stable. The constrained new supply and consumer uncertainty delaying turnover are key factors contributing to this trend[3][5].

Here's a summary of the key factors affecting the U.K.'s new-vehicle production and used-car market prices:

| Factor Type | Impact on New-Vehicle Production | Impact on Used-Car Market / Prices | |---------------------|----------------------------------------------------------|-------------------------------------------------| | Factory disruptions | Reduced production volumes, lowest since 1952 (May 2025) | Potential supply constraint, supporting used car prices | | U.S. tariffs | Higher costs and export challenges | Less supply trickling down to used market | | Trade deals | Potential future boost in exports (US, EU, India) | Longer term could increase new car supply, easing used-car prices | | Government industrial strategy | Investment in battery factories, R&D, workforce | Potential innovation and electrification increase | | Consumer confidence | Declining consumer intent to buy new cars amid uncertainties | Delayed new car purchases may increase used demand | | Electric Car Grant | Awaiting clarity delays BEV purchases | May increase short-term used EV prices | | Market dynamics | New car sales dipped 5% in July 2025 | Used car prices likely stable or elevated given constrained new supply |

The Society of Motor Manufacturers and Traders (SMMT) reported the decline in vehicle production in April 2025, with export car production falling 10.1%[1]. Mike Hawes, SMMT chief executive, called for "urgent action" to boost domestic consumer demand and international competitiveness[1].

Vehicle production in the U.K. fell 15.8% in April 2025, reaching the lowest level for the month since 1952 (excluding pandemic lockdown months in 2020)[1]. Aidan Rusby, CEO and founder of digital finance provider Carmoola, stated that the fall in new-vehicle production could push up prices in the used-car market[1].

Demand for used vehicles in the U.K. is already strong and could intensify, according to Aidan Rusby[1]. The EU remains the largest recipient of exports from the U.K., taking more than half of all exports[1]. Shipments to the EU from the U.K. fell by 19.1% in April 2025[1].

Exports to Turkey increased by 31.2% in April 2025, while exports to China increased by 44.0%[1]. The U.S. received 16.5% of all exports from the U.K. in April 2025[1]. Commercial vehicle output declined 68.6% to 2,669 units in April 2025, primarily due to a plant closure and normalizing of demand for new heavy goods vehicles[1].

The decrease in vehicle production in April 2025 was due to automaker uncertainty over U.S. import tariffs and the timing of the Easter holidays[1]. The late Easter in April 2025 led to a decrease in vehicle production compared to the previous month[1].

The government has successfully negotiated improved trading conditions for the automotive sector with the U.S., EU, and India[1]. Shipments to the U.S. from the U.K. decreased by 2.7% in April 2025[1]. Passenger car production fell 8.6% to 56,534 units in April 2025[1]. The decrease in vehicle production in April 2025 was exacerbated by automaker model changeovers and lower demand in key export markets[1].

In conclusion, the U.K.'s new-vehicle production in 2025 has been challenged by supply chain issues, trade policies, and model transition disruptions, while the used-car market prices have been influenced by delayed new car sales and consumer uncertainties, keeping prices supported or elevated[1][2][3][5].

1. The automotive industry's financial stability and future growth in the U.K., given the challenges in new-vehicle production, could potentially be bolstered by the government's efforts to enhance manufacturing capacity and export competitiveness, as part of the industrial strategy, which encompasses investments in battery plants, semiconductors, R&D, regulatory reforms, energy cost reduction, and international trade deals.
2. The finance sector, specifically within the transportation industry, may observe shifts in the used-car market as a result of the stalling of new car sales and buyer uncertainty caused by factors such as the delay in clarity over Electric Car Grants (ECG) and model changeovers, which could lead to increased demand for used vehicles due to delayed new car purchases.

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