The UK automotive industry is facing contrasting fortunes at the start of the year. While overall car and commercial vehicle production has declined significantly, there has been a notable increase in the production and consumer interest in electric vehicles (EVs), as highlighted in the latest reports from the Society of Motor Manufacturers and Traders (SMMT) and Auto Trader.
In January, UK vehicle production fell by 17.7% to 78,012 units, a stark contrast to the same month last year, which had seen increases of 21% and 27.5% in car and commercial vehicle output respectively. This decline reflects broader challenges within the global automotive market, including weakening demand in key markets such as the EU, China and the UK itself – as well as impacts from planned model changeovers and broader economic pressures. Anyone who has watched the awkward exchanges between Trump and Starmer will know that there is a distinct possibility of tariffs coming – as the world continues to move from open to protected markets.
Despite these challenges, the production of EVs – including battery electric (BEV), plug-in hybrid (PHEV), and hybrid electric vehicles (HEV) – has seen a modest uptick. There was a 1.5% increase in EV production, totalling 30,028 units in January, representing just over 42% of all cars manufactured during the month. This is the highest proportion of EVs in the monthly car production mix since December 2022, when it reached more than 47%.
The surge in interest in EVs is even more pronounced on the consumer side, according to Auto Trader. The platform reported a 15% month-on-month increase in visits to its new car section in February, with a significant 23% rise year-on-year. This increased activity is largely in anticipation of the new '25' registration number plates due in March, a key period for the UK car market.
Auto Trader's data also revealed a strategic response from manufacturers and retailers, who are ramping up discounts to entice buyers, particularly for electric models. Although the average discount on new EVs slightly decreased from 11.3% in January to 10.8% in February, the approach to March could see further incentives as the industry aims to meet escalating Zero Emission Vehicle (ZEV) mandate targets, which are set to increase to 28% this year.
MG's models, particularly the MG ZS and MG 4, have dominated the charts for in-demand new electric vehicles. The MG ZS emerged as February's ‘hottest' new electric model, attracting close to an 8% share of all new EV enquiries on Auto Trader. This interest in MG and other electric models like BMW, MINI, and the emerging Chinese brand BYD – which has seen a 2.3% year-on-year increase in enquiries – underscores a growing consumer shift towards electric vehicles.
The UK's export market continues to play a crucial role, with the majority of cars produced being destined for overseas markets. However, there has been a decrease in exports, particularly to the EU and China, which saw reductions of 11.2% and 46.3%, respectively. Conversely, exports to the US, Turkey and Japan have seen increases.
On the commercial vehicle front, there has been a significant drop in exports, particularly to the EU, which took over 97% of all CV exports, reflecting a year-on-year decrease of 46.6%. The domestic market also saw a decline in CV output, down by just over 31% to 2,649 units.
Amid these mixed signals, the automotive industry is calling on the government to prioritize the sector's needs in upcoming industrial and trade strategies. The rapid allocation of £2 billion from the government’s Automotive Transformation Fund is deemed critical to support the industry, particularly to enhance the competitiveness of UK automotive manufacturing and the production of EVs.
Mike Hawes, SMMT Chief Executive, emphasized the sector's challenges and the need for supportive policies, stating, “UK vehicle producers face a perfect storm of global trade uncertainty, challenging manufacturing conditions and a market transition which is proving tougher than expected. The sector is doing all it can to keep production plans on track but needs government to ensure automotive is at the heart of its forthcoming industrial and trade strategies with promised funding invested as soon as possible.”
The UK automotive industry, a pivotal component of the national economy, contributes £93 billion in turnover and £22 billion in value added annually, supporting approximately 813,000 jobs across the sector. As the industry navigates these turbulent times, the focus on electric vehicles appears to be a bright spot, suggesting a path forward amid broader sectoral challenges.
This recent upsurge of interest in EVs, bodes well for the market.
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